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Providing Content in Canada's Official Languages

Please note that the Official Languages Act requires that government publications be available in both official languages.

In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                       SUBJECT/SUJET:

 

 

 

VARIOUS BROADCASTING APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

Portage IV                            Portage IV

140 Promenade du Portage              140, promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

 

March 29, 2007                        Le 29 mars 2007

 


 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.


               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

 

            VARIOUS BROADCASTING APPLICATIONS /

            PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

BEFORE / DEVANT:

 

Rita Cugini                       Chairperson / Présidente

Michel Arpin                      Commissioner / Conseiller

Richard French                    Commissioner / Conseiller

Barbara Cram                      Commissioner / Conseillère

Helen del Val                     Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Jade Roy                          Secretary / Secrétaire

Valérie Dionne                    Legal Counsel /

Conseillère juridique

Joe Aguiar                        Hearing Manager /

Gérant de l'audience

 

 

 

 

 

HELD AT:                          TENUE À:

 

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

Portage IV                        Portage IV

140 Promenade du Portage          140, promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

 

March 29, 2007                    Le 29 mars 2007

 


           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

Larche Communications Inc.                        783 / 4951

 

Haliburton Broadcasting Group (OBCI)              842 / 5332

 

 

 

PHASE III

 

 

INTERVENTION BY / INTERVENTION PAR:

 

 

Music and Film in Motion                          910 / 5751

 

 

 

PHASE IV

 

 

Connelly Communications Inc.                      921 / 5817

 

William Wrightsell                                923 / 5830

 

Joco Communications Inc.                          925 / 5839

 

 

 


           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Canadian Documentary Channel Limited Partnership  927 / 5854

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

CFTPA                                             968 / 6108

 

Documentary Organisation of Canada                991 / 6234

 

 

 

 

AFFIRMED:  MR. DAVID J. MANCY                    1032 / 6460

 

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

CJRN 710 Inc.                                    1032 / 6463

 

 


                  Gatineau Quebec / Gatineau (Québec)

‑‑‑ Upon resuming on Thursday, March 29, 2007

    at 0900 / L'audience reprend le vendredi

    29 mars 2007 à 0900

LISTNUM 1 \l 1 \s 49454945             THE CHAIRPERSON:  Order, please.

LISTNUM 1 \l 14946             Madam Secretary.

LISTNUM 1 \l 14947             THE SECRETARY:  For the record, Newcap has filed their market study.  This document is available in the examination room.

LISTNUM 1 \l 14948             We will now proceed with Item 17 on the Agenda which is an application by Larche Communications Inc. for a licence to operate an English‑language FM commercial radio programming undertaking in Sudbury.

LISTNUM 1 \l 14949             The new station would operate on frequency 91.7 MHz, Channel 219B, with an effective radiated power of 50,000 watts, non‑directional antenna/antenna height of 120.9 metres.

LISTNUM 1 \l 14950             Appearing for the applicant is Mr. Paul Larche, who will introduce his colleagues.  You will then have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 14951             MR. LARCHE:  Thank you.


LISTNUM 1 \l 14952             Good morning, Madam Chair and Commissioners.  My name is Paul Larche.  I am the President of Larche Communications Inc., or LCI for short.  It is a privilege, as always, to be in front of you today applying for a new FM radio service for Sudbury.

LISTNUM 1 \l 14953             I would like to introduce my panel.  Unfortunately, Mora Austin, who is our company's Vice President, could not join us this morning as her son is having surgery, so I have asked our Midland Station Manager's General Sales Manager, Linda Young, to do a little pinch‑hitting for Mora this morning.  Linda has worked at CICZ for over 10 years and she is to my far left, your far right.

LISTNUM 1 \l 14954             Next to Linda ‑‑ actually, next to me, is our company's Music and Program Director, along with Morning Show Host of CICZ‑FM Ted Roop.  Ted recently won the Canadian Country Music Association's On‑Air Personality of the Year Award for 2006.


LISTNUM 1 \l 14955             Seated next to Ted is our Promotions Director for CIKZ‑FM Kitchener, Beth Warren.  Prior to joining us just over three years ago, Beth worked for more than 10 years in the Canadian Independent Country Music industry.  She won Manager of the Year award in both 1999 and 2000 at the Ontario Country Music Awards and Record Company Person of the Year at the CCMA awards in 1999.

LISTNUM 1 \l 14956             Madam Chair and Commissioners, I can't tell you how excited I am to be here today.  Sudbury really does hold a very special place in my heart and life.  In 1986, I was transferred out of Timmins, my home town, to Sudbury in the capacity of General Manager of CKSO and CIGM‑FM, two stations Telemedia had just purchased from the Plant family.

LISTNUM 1 \l 14957             When you grow up in Timmins, moving to Sudbury is a big deal.  Sudbury was, and still is, the largest city in Northern Ontario.  I was only 26 years old, but what I lacked inexperience I hope I made up in enthusiasm.

LISTNUM 1 \l 14958             The two stations needed a lot of work and, with the help of a great group of people, many of whom still work there, we turned these stations around from money losers to a profitable business.

LISTNUM 1 \l 14959             I made many friends in Sudbury that I'm still very close to today.  My second daughter, Jessica, was born at Sudbury General.  She is 19.  Whew, time flies.


LISTNUM 1 \l 14960             Sudbury is where I was first exposed to the Salvation Army.  I sat on their Board and marvelled at the great things they unselfishly do for the communities they serve.  They taught me so much about giving back.

LISTNUM 1 \l 14961             I spent four years in Sudbury.  It was, and still is, a great city that sometimes gets an unfair rap.

LISTNUM 1 \l 14962             I also hoped I could do business there again.  Northern Ontario is a great place to grow up and do business.  I understand its culture and needs.  J'apprécie et comprends la culture du nord Ontario ‑ de le point de vue anglais et franco‑ontarian.

LISTNUM 1 \l 14963             We are very proud of the application before you today.  We believe it strikes the perfect balance of reflecting and satisfying market needs, sound business judgment, and fulfilling the mandate of the Broadcast Act.

LISTNUM 1 \l 14964             So let's start with our business plan.

LISTNUM 1 \l 14965             Ted...?

LISTNUM 1 \l 14966             MR. ROOP:  Thank you very much, Paul.

LISTNUM 1 \l 14967             Good morning, Commissioners.


LISTNUM 1 \l 14968             We are applying for a country music station in Sudbury.  I want to make it clear that this decision was not based on the fact that we are known for country radio, but because that is what the market wants.  We commissioned research to determine the viability of the top three radio formats currently missing on the FM band in Sudbury:  Country, CHR and Alternative Rock.

LISTNUM 1 \l 14969             The format with the best potential for success was clearly Country.  This stands to reason, as Sudbury is one of the few communities of its size in Ontario that does not have a country FM.  Country radio is Canada's third most listen to format, and forth in Ontario.

LISTNUM 1 \l 14970             As you know there is an AM station owned by Rogers in Sudbury that does air some country music.  This station, however, is not for filling the needs of the market, particularly with listeners under the age of 50, where CIGM only garners a 3 percent share of hours tuned.

LISTNUM 1 \l 14971             This is an unfortunate reality of music on AM radio today and is why several are finding alternative formats such as sports and talk.  Country listeners in Sudbury have abandoned radio for iPods and internet to get their country fix.

LISTNUM 1 \l 14972             The new station were applying for will be called KICX 91.7, Sudbury's Hot New Country, branded in the same way as our Midland station, CICZ, which we call KICX 104, and CIKZ which we call KICX 106.


LISTNUM 1 \l 14973             But KICX 91.7 won't be a rebroadcaster or of our existing station.  All of the programming will be local.  KICX 91.7 will feature the best in country music from the late '80s, '90s and today.  Core artists will include Shania Twain, the Dixie chicks, Paul Brandt, Alan Jackson and Terri Clark.

LISTNUM 1 \l 14974             Approximately 50 percent of our selection will be current.  However, heritage country artists, like Patsy Cline and Anne Murray, will also find a home of our station.  We will place a special emphasis on Canadian country music.  That's why we have proposed as a condition of licence a minimum of 40 percent Canadian content.

LISTNUM 1 \l 14975             We are also very proud of our track record to developing and exposing new country emerging artists.  Beyond our substantial CCD commitments, we have committed to airing vignettes that highlight emerging Canadian artists that we have added to our playlist.


LISTNUM 1 \l 14976             We are prepared to accept as a condition of licence a quota on Canadian emerging artists, although we do believe the CRTC must clearly articulate how it will define an emerging artist and the regulatory mechanism it will use to measure it.  We support the CAB's intervention for this hearing regarding these matters.

LISTNUM 1 \l 14977             I am very proud of the track record KICX 104 in Midland has established.  The Canadian Country Music Association has chosen us as Country Station of the Year for four out of the past five years.  We would like to duplicate this success in Sudbury.

LISTNUM 1 \l 14978             Of course, music is only one component of a successful station.  Our non‑music programming, in a nutshell, will be local, local and more local.  That is what has made us successful in Central Ontario, that is what is making must successful in Kitchener, and that is what will make us successful in Sudbury.

LISTNUM 1 \l 14979             In today's age of iPods, Satellite Radio and other emerging technologies, terrestrial radio's true edge is being local:  Informing, reflecting and discussing local and regional content.


LISTNUM 1 \l 14980             We have committed to over 12 and a half hours of meaningful local spoken‑word programming.  For example, we will program is six times per day special community vignettes called "Community Clips".  They will feature a wide range of local topics and interviews aimed to reflect the needs of Sudbury and cultural diversity of the region.

LISTNUM 1 \l 14981             With over 300 lakes in the greater Sudbury Watershed, we will offer comprehensive daily recreation and tourism reports throughout the year focused on boating, fishing, camping, skiing, snowmobiling and more.

LISTNUM 1 \l 14982             You will find our community cruiser at many community events such as the Northern Lights Festival, offering both on‑site and on‑air exposure.

LISTNUM 1 \l 14983             In addition, the station will invite various community groups and charitable organizations to post their information, special events and links on our website.

LISTNUM 1 \l 14984             KICX 91.7 will also offer a new and diverse news voice to the Sudbury market.  We will provide a comprehensive news service, broadcasting over four hours of news and information per week.  The news will be supplemented by local sports, local weather and local traffic reports throughout the broadcast day.

LISTNUM 1 \l 14985             And, as an added benefit, we will cross‑promote news, public events and tourist attractions between our Midland and Kitchener operations.

LISTNUM 1 \l 14986             Now to talk to you a little bit more about our company, here's Linda.


LISTNUM 1 \l 14987             MS YOUNG:  Thanks, Ted.

LISTNUM 1 \l 14988             Madam Chair and Commissioners, I have worked at CICZ‑FM for over 10 years.  Prior to Paul's purchase, I can honestly tell you it was in bad shape.  We only had a staff of six people.  We were losing money, revenues, let alone morale.

LISTNUM 1 \l 14989             It's hard to believe that Paul bought the station 10 years ago.  I guess time really does fly when you are having fun.  And what a great ride it has been.

LISTNUM 1 \l 14990             Under Paul's leadership CICZ‑FM has been a great broadcast success story.  We are very proud to say were doing the same in Kitchener.

LISTNUM 1 \l 14991             Our Mission Statement is exceedingly simple:  MOCHA.  This stands for Make Our Customers Happy Always.  Our customers are the people of communities we serve, including our listeners, our advertisers, and our employees.

LISTNUM 1 \l 14992             In fact, it is mandatory at LCI that all management volunteer for a service group or charitable organization within our market.  The core values behind MOCHA are really quite simple:  Make sure we have the right strategy, the right people, effective systems and quality in everything we do.


LISTNUM 1 \l 14993             Our vision is to be the most successful small, independent broadcaster in Canada.  We want to be envied as a leader in community service, ratings, profitability, innovation and also a place to work.

LISTNUM 1 \l 14994             It really comes down to this:  Ask our customers what they want and give it to them.  What a concept!

LISTNUM 1 \l 14995             Despite the size of our company, Paul has set high standards that bring out the best in all of us.  His staff and peers respect and admire him.  He believes in rewarding people, both promotionally and financially, and our profit‑sharing programs exhibit his generous character.

LISTNUM 1 \l 14996             I speak on behalf of the entire staff, when I say Paul has taught us all so much, so much about running a profitable business; so much about managing and coaching; and so much about the importance of serving our communities with the same dedication and passion that we all have for this great business, radio.


LISTNUM 1 \l 14997             We want our company to grow.  Paul wants to give his employees an opportunity to grow as well.  That is why we are here today.  We have shown ourselves and we have shown the industry that despite being a small independent we can compete with the very best in the country.

LISTNUM 1 \l 14998             I would now like to pass it over to Beth.

LISTNUM 1 \l 14999             MS WARREN:  Thanks, Linda.

LISTNUM 1 \l 15000             I have worked in the music business in a number of capacities for more than 20 years.  This is my first occasion to present in front of the CRTC, and I would like to take this opportunity to tell you first‑hand that the dollars committed by radio really do make a difference.  I have worked with several artists that have gone on to have successful careers and they couldn't have done it without the help and the financial support of radio.

LISTNUM 1 \l 15001             LCI is committing a total of $350,000 over the first licence term.  We believe our initiatives will make a real difference, particularly with emerging artists.

LISTNUM 1 \l 15002             $20,000 per year will go to FACTOR.  It goes without saying the great job they do at developing new talent and assisting Canadian talent in general.


LISTNUM 1 \l 15003             Another $10,000 per year will go to the CCMA's Country Talent Development Fund.  These funds provide emerging Canadian artists great showcase opportunities, including Canadian Country Music Week each September.

LISTNUM 1 \l 15004             We have committed $10,000 per year to send Sudbury and area emerging artists to Canadian Music Week.  These participants will attend special artist/creator development courses, seminars, workshops and mentoring sessions that will help provide new artists, writers and musicians with the knowledge and tools they need to succeed.

LISTNUM 1 \l 15005             KICX 91.7 will also host the StarQuest talent search at the cost of $10,000 per year.  This will be modeled on the successful StarQuest's we conduct in Midland and Kitchener.  The winner will receive studio time, reproduction and, of course, airtime on all of our stations.

LISTNUM 1 \l 15006             Our application also outlines a commitment of $50,000 per year in airtime devoted to promotion of music‑related activities in Sudbury and area as it relates to emerging artists.  This would include the promotion of concerts and performances by local artists; artistic programs in the community; and the release of CDs for local artists.  These are truly outstanding CCD initiatives, that we believe exceed and surpass the Commission's CCD plan as outlined in the recent Radio Review.


LISTNUM 1 \l 15007             LCI is committed to Canadian country music ‑‑ it's our lifeline ‑‑ and we know we need a steady supply of high quality talent for our listeners.  We always strive to present Canadian emerging artists any time we are able to, often opening for a popular headliner so that we can have a built‑in audience.

LISTNUM 1 \l 15008             LCI has presented many country music concerts in both Central Ontario and Kitchener‑Waterloo.  These shows are done at our expense and our risk.

LISTNUM 1 \l 15009             And we often present concerts at no cost to the audience.  For example, Paul challenged me a few years ago to present five Canadian artists in on night for more than 2,000 people.  It sounds simple enough, however all five artists were playing in three different venues in three different cities.  It was a bit of a challenge logistically, however, we exposed as many of our listeners as possible to as much Canadian country talent as possible in just one night.  The audience, our listeners, were absolutely thrilled.  Three years later I still have people telling me what a great time they had.

LISTNUM 1 \l 15010             The artists?  Not only did they also have a great time, but they sold more CDs in that one night than they have at most gigs and, as a result, they now have a tonne of loyal fans.


LISTNUM 1 \l 15011             In my career, I have worked on the artist side with many radio stations from across the country.  I know it sounds a little bit like job security, but I can honestly tell you that I have never seen a company that puts so much time, effort, money and heart into promoting and exposing Canadian talent.  We hope to have the chance to do this in Sudbury.

LISTNUM 1 \l 15012             Paul...?

LISTNUM 1 \l 15013             MR. LARCHE:  Thanks, Beth.

LISTNUM 1 \l 15014             In this time of consolidation, radio station ownership is changing very quickly.  Independent broadcasters are becoming rare, which is a shame because I believe we play a vital role in Canada's broadcast system.  Beyond offering an alternative voice, we create many of the jobs in our industry, particularly for people starting out, and often consolidation results in staff reductions.

LISTNUM 1 \l 15015             But equally important is that our industry functions at its best with many stakeholders, not just the voice or position of five big companies with various competing interests.  That's why I'm so active with the Canadian Association of Broadcasters and I chair several committees, including the Independent Radio Caucus Committee, to ensure the smaller players have a voice.


LISTNUM 1 \l 15016             The larger companies, with their considerable financial and human resources, can make it difficult for an independent to survive if they want, especially if they decide to go head‑to‑head in a competitive market.  Some can afford to lose money for years.  An independent broadcasters cannot.

LISTNUM 1 \l 15017             LCI is being proactive with this application.  We are positioning ourselves for the long term.  Economies will be realized for us in areas such as programming, management and accounting, and since all three stations will have the same format, several promotions could involve all entities.

LISTNUM 1 \l 15018             I mentioned earlier my exposure to the Salvation Army in Sudbury in 1986.  This is an organization I'm still very much involved with today.  This past Christmas, our two stations collectively raised over $50,000 for needy families in our communities with the Salvation Army:  making a difference in the communities we serve.  At our Christmas party we talked about it.  There wasn't a dry eye in the house, because we all consider this a privilege.


LISTNUM 1 \l 15019             We are custodians of broadcast licences that belong to the Canadian people.  The Broadcast Act wisely lets us hold on to it if we give back and reflect our country and our communities.  What a deal.

LISTNUM 1 \l 15020             You have had several great applications in front of you yesterday and TV today by some great broadcasters.  I don't envy your position.

LISTNUM 1 \l 15021             But, in conclusion, I hope you will agree this application exceeds and surpasses the Commission's criteria for licensing a new radio station.  I trust you will agree that it a fair, realistic application based on what we have already proven we will do, not just on what you want to hear.

LISTNUM 1 \l 15022             Approval of this application will fill the largest under served format in the market, country, by a young group of broadcasters who are considered by their peers, as the best in Canada when it comes to this format.  We will bring listeners back to radio.

LISTNUM 1 \l 15023             Approval of this application will introduce a new editorial voice in the city, one that will offer extensive news and community programming, as well as a number of additional community initiatives that will expand and reflect the make‑up and culture of the great city of Sudbury.


LISTNUM 1 \l 15024             Approval of this application will result in a 40 percent Canadian content and a comprehensive series of expenditures on Canadian talent totalling over $350,000 over the licence term.

LISTNUM 1 \l 15025             Finally, approval of this application will allow a small, independent radio company to get stronger, stronger to hold its own against much larger public companies, stronger to weather economic downturns, and stronger to contribute and enhanced, the goals and aspirations of the Canadian Broadcast Act.

LISTNUM 1 \l 15026             Thank you very much.  We appreciate your time and we are ready for your questions

LISTNUM 1 \l 15027             THE CHAIRPERSON:  Thank you, Mr. Larche, and your colleagues.

LISTNUM 1 \l 15028             Commissioner del Val...?

LISTNUM 1 \l 15029             COMMISSIONER del VAL:  Thank you, Madam Chair.

LISTNUM 1 \l 15030             Thank you for your presentation, Mr. Larche and your team.

LISTNUM 1 \l 15031             We will start with the easy stuff first.  Let's just go to the format that you have chosen.

LISTNUM 1 \l 15032             The age range, the demographic that you have identified, 35 to 64, is quite a wide range.  Can you identify within that range what is the sort of the core target group?


LISTNUM 1 \l 15033             MR. LARCHE:  Thirty‑nine year old female.

LISTNUM 1 \l 15034             COMMISSIONER del VAL:  That is quite a narrow ‑‑ all right.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15035             MR. LARCHE:  Is that narrow enough for you?

LISTNUM 1 \l 15036             COMMISSIONER del VAL:  You can widen it a bit more than just one year.

LISTNUM 1 \l 15037             MR. LARCHE:  We have a fictional couple called Jack and Diane.  Diane is 39 and Jack is 41 and we know who they are, what is important in their lives, where they work, where their kids go to school, the types of things that mean a lot to them in terms of values in their life.

LISTNUM 1 \l 15038             Country music is a very roots‑based‑type format with strong values.  So we have a very, very, very clear definition of who our target customer is and all of our on‑air staff and, frankly, our entire staff, know Jack and Diane very well.

LISTNUM 1 \l 15039             I can tell you where they live in Midland and in Kitchener if you want.

LISTNUM 1 \l 15040             COMMISSIONER del VAL:  So are those the same target groups in your Midland and the Kitchener stations?

LISTNUM 1 \l 15041             MR. LARCHE:  That is correct.


LISTNUM 1 \l 15042             COMMISSIONER del VAL:  I know you have also named and identified the country music from the late '80s, '90s. and then 50 percent is from that category, '80s, '90s up to today.  Then you have named some of the Patsy Cline's and Anne Murray's, the older artists.

LISTNUM 1 \l 15043             Are you going to be sort of day‑parting your programming or are you going to mix it all up?

LISTNUM 1 \l 15044             MR. LARCHE:  I will let Ted talk a little bit more about that, but we do mix it all up and we do feature some of what we call "classic country".  We call them "KICX Classic Cuts" and we position those not every hour but through the day for those country fans who do enjoy some of the older heritage stuff.

LISTNUM 1 \l 15045             Ted, do you have anything to add to that?

LISTNUM 1 \l 15046             MR. ROOP:  We do mix it up.  We have a very good era balance between all of the artists.  We don't do any day‑parting.  We try to go with sort of a Gold Record and a Current Record and a Gold Record and a Current Record.  So we split it up almost about 50:50.

LISTNUM 1 \l 15047             COMMISSIONER del VAL:  Thank you.


LISTNUM 1 \l 15048             Where do you think you will slot in the emerging artists?

LISTNUM 1 \l 15049             MR. ROOP:  The emerging artists would be part of our Current Records.  They would go in as a current.  It doesn't matter if it's Canadian or international, it's 50:50 Gold/Current.

LISTNUM 1 \l 15050             COMMISSIONER del VAL:  I was also looking at the study that you filed with your application.

LISTNUM 1 \l 15051             Is that an excerpt from the study?  Because what I seem to have is about five pages, and that is on your application Addendum 2.

LISTNUM 1 \l 15052             MR. ROOP:  Yes.

LISTNUM 1 \l 15053             COMMISSIONER del VAL:  Would it be possible for you to file the full study?

LISTNUM 1 \l 15054             MR. LARCHE:  That is the full study.

LISTNUM 1 \l 15055             COMMISSIONER del VAL:  Oh, all right.

LISTNUM 1 \l 15056             I know that you said that the respondents were asked:  Are there any stations you can listen to like that now?  Meaning country.

LISTNUM 1 \l 15057             MR. ROOP:  Yes.

LISTNUM 1 \l 15058             COMMISSIONER del VAL:  I couldn't interpret from the study that you filed the answers to that question.


LISTNUM 1 \l 15059             MR. LARCHE:  I can't remember the number off the top of my head, but it is in there and I can get that number back to you.

LISTNUM 1 \l 15060             COMMISSIONER del VAL:  More specifically, I know that you have identified in your supplementary brief that the reason that the current country station has only a 3 percent share is because the FM sound is not optimal for music.

LISTNUM 1 \l 15061             Now, were the participants in the study asked specifically:  Why are you not listening to the current AM country station?

LISTNUM 1 \l 15062             MR. LARCHE:  No, they were not.

LISTNUM 1 \l 15063             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15064             MR. LARCHE:  We are basing that on what is I think pretty well generally accepted in the industry today, is that AM radio particularly ‑‑ when we say a 3 share, that is under the age of 50.

LISTNUM 1 \l 15065             COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 15066             MR. LARCHE:  The station share is higher than that.  Certainly when you go over the age of 50 I think it jumps up to a 21 or 22 share.  I think that is just reflective of what we have seen in several markets and not just in country in different formats.  As the demographics get older, the demographic group that likes to listen to music on radio, if given a choice, would prefer FM over AM.  We have seen it time and time again.


LISTNUM 1 \l 15067             So we did not specifically ask the question, but we feel pretty convinced that is the situation, because Rogers are very good programmers and it wouldn't be an issue that the product isn't good, it is an issue of the product is on AM.

LISTNUM 1 \l 15068             COMMISSIONER del VAL:  We won't have the record show that the table is falling apart on you right there.

LISTNUM 1 \l 15069             MR. LARCHE:  Thank you.

LISTNUM 1 \l 15070             I tried very nonchalantly to fix it, but it's not working.  Oh, here we go.  We are good.  Thank you.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15071             COMMISSIONER del VAL:  Now then, can you tell me more about the differences you see between your FM country station and the AM country station?

LISTNUM 1 \l 15072             MR. LARCHE:  Certainly, the biggest one will be that we are on FM.  We are a 24‑hour‑a‑day country station.

LISTNUM 1 \l 15073             What Rogers is doing ‑‑ and I want to pick my words carefully because I know that they are in the room and I don't want to speak on what their intentions are, however, I do know that they have already repositioned CIGM as Sudbury's news leader.


LISTNUM 1 \l 15074             I know that if you go to the front web page for their radio station you won't see the words "country music" or "music" for that matter.  They are going with talk, I think from 6:00 p.m. until 6:00 a.m., and expanded news coverage.  So the amount of country music they are playing is only between 6:00 a.m. and 6:00 p.m.

LISTNUM 1 \l 15075             The music they are playing will definitely be very similar to ours.  We are not going to say we are playing different music, but we are playing it on the FM band.

LISTNUM 1 \l 15076             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15077             MR. LARCHE:  Again, I would never be as presumptuous as to speak for Rogers, but I would think that they are heading in that news talk direction, as they have done in several other markets very successfully.

LISTNUM 1 \l 15078             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15079             Maybe we can talk about the spoken word programming right now.

LISTNUM 1 \l 15080             You have given us quite a bit of very good information in your October 17th response to deficiencies.  I am referring to page 2 of the response, your answer to question 1(b).


LISTNUM 1 \l 15081             You said that 10 percent of your weekly programming ‑‑ and that 10 percent will equal 12 hours and 36 minutes ‑‑ would be devoted to spoken word and, of that, 20 percent of spoken word will be to news, which is 2 hours and 5 minutes, and then another 20 percent to regional sports, weather forecasts, traffic and road reports.

LISTNUM 1 \l 15082             Now, what about the other 60 percent?  I know you go on to list the other things you do in answer to 1(c).  Could you give us a further breakdown?

LISTNUM 1 \l 15083             MR. LARCHE:  Sure.  Sure.

LISTNUM 1 \l 15084             Community clips, that will be 126 minutes or 17 percent; our recreation reports are 96 minutes or 13 percent; our community cruiser, this is over the course of the week of course, 68 minutes or 9 percent; our emerging artists vignettes are 28 minutes; and then the other 25 minutes are mandated announcer community talk every hour where they talk about what is going on in the community, public service announcements, and so on.

LISTNUM 1 \l 15085             Just because I know this has come up a lot in the last few days, we can submit, if you want, a matrix of all of our programming throughout the course of the week that highlights when these things air.  We would be more than happy to do that for you, if it would clarify.


LISTNUM 1 \l 15086             COMMISSIONER del VAL:  That would be great, if you could please file that.  Yes.

LISTNUM 1 \l 15087             MR. LARCHE:  We have that with us here today.

LISTNUM 1 \l 15088             COMMISSIONER del VAL:  I know Ms Dionne will want to ask:  When do you think you could file that, please?

LISTNUM 1 \l 15089             MR. LARCHE:  Right after we are done.

LISTNUM 1 \l 15090             COMMISSIONER del VAL:  Perfect.  Thank you.

LISTNUM 1 \l 15091             Then, just when you are talking about the produced community features, is that also going to be live or ‑‑

LISTNUM 1 \l 15092             MR. LARCHE:  No.  They are pre‑produced by our news team.

LISTNUM 1 \l 15093             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15094             MR. LARCHE:  We do this already in our other stations so we have the template and the model.

LISTNUM 1 \l 15095             Our news department, we run news in the morning and at noon and then later in the afternoon, so there is about a five or six‑hour period where the news department is gathering information.  One of their jobs is to put these community clips together.


LISTNUM 1 \l 15096             What it is, is basically it's a ‑‑ we will use a public service announcement as an example.

LISTNUM 1 \l 15097             If something is going on in the community, instead of just saying this is going on, what we will do is we will call the person who is organizing it, we will interview them.  Our news department will interview them on‑the‑air, we will record little bits about, you know, where this event is, why you are doing it, so on so forth.  So it's a lot more of a detailed thing than just mentioning it.

LISTNUM 1 \l 15098             If there is a cultural event going on we ‑‑ and we might do a series of them as well.  Sometimes if there is, you know, an event going on for a week that we know the community is interested in, we will do a series of them so that we will follow up on it.

LISTNUM 1 \l 15099             So we pre‑produce them because it allows us to edit them and make sure that we are giving the meat.  But they are done every day and they are done through the year.

LISTNUM 1 \l 15100             And we have a great response to them.  They are actually a very good programming tool.

LISTNUM 1 \l 15101             COMMISSIONER del VAL:  Great.


LISTNUM 1 \l 15102             You were talking about local, regional and national sports as part of your spoken word and you said an emphasis will be placed on local sports.

LISTNUM 1 \l 15103             "Emphasis" is sort of more than 50 percent or predominantly it's all local sports activities?

LISTNUM 1 \l 15104             MR. LARCHE:  Our news and our sports, we do run more than 50 percent local.  Our feeling is that if there is a huge international story that people will probably not seek us out to get all the detailed information.  We will certainly let them know about it, but ‑‑ particularly in some of the competitive markets we are in where there are 24‑hour live news talk stations.

LISTNUM 1 \l 15105             So what we try to do, particularly in the sports and in news, is go local.  You know, we strive for about 60 percent local and the other 40 percent would be regional and national/international.  Of course, depending on the day, that can move around, but that's what we have mandated our news people to do.  I think that is what, as we said, is a success to radio, is you have to be local.


LISTNUM 1 \l 15106             The only thing that we have going for us in this time of so much technology changing, satellite radio ‑‑ I haven't got one yet but, you know, a few of my friends do and they are pretty compelling.  They have a lot of good programming on them and, you know, Internet radio.

LISTNUM 1 \l 15107             I do have an iPod and my kids do, Ted does, we all do.  The only thing that is going to separate radio apart from all of these other technologies is being local.  So we really consider it our only competitive advantage.

LISTNUM 1 \l 15108             I know it sounds a little like what you want to hear, but this is ‑‑ you know, this is something that we really believe as a company is true to our long‑term survival and if we are not serious with it, you know, we can certainly be out of business pretty quick.

LISTNUM 1 \l 15109             COMMISSIONER del VAL:  That leads me to, I believe you said that you will have two full‑time ‑‑ is it two full‑time staff in the Sudbury station or two full‑time news staff?

LISTNUM 1 \l 15110             MR. LARCHE:  Two full‑time news.  One news director and another news person, and we also will have part‑time news people for weekends.

LISTNUM 1 \l 15111             COMMISSIONER del VAL:  All right.  So how many staff do you anticipate placing in the Sudbury station all together?


LISTNUM 1 \l 15112             MR. LARCHE:  On‑air we will have three full‑time announcers, we will have two news people, we would have obviously a station manager/general sales manager.  One of our announcers would act as the program director, just as Ted does in Midland.  He also does the morning show and cleans the office on Thursdays ‑‑

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15113             MR. LARCHE:  But he's really good at it.

LISTNUM 1 \l 15114             We have to run, you know, a lean ship, and we have to ‑‑ you know, again, as I said in our opening remarks, this is a balancing act and we know what you want, we know what the Broadcast Act wants and we know what the community wants, but we always have to make sure that we are positioning ourselves for inevitable things that may come up and turn us down.

LISTNUM 1 \l 15115             With Kitchener, you know, we really had a devastating first year and a half when we launched because the signal that we were approved with turned out to be totally inadequate.  People could not hear us.  It was a disaster, frankly.  We had to immediately re ‑‑ and this was something that no one could foresee.  Other people had applied for this frequency.


LISTNUM 1 \l 15116             It was something called thermal ducting, which I will not pretend to know, from a Christian station in Buffalo, but needless to say it ‑‑ nobody could hear us.

LISTNUM 1 \l 15117             So it really knocked us back on our business plan, knocked us back on where we thought we would be, because we had to reapply for a new frequency.  There are few frequencies down there, it was a competitive process, but the CRTC, in its infinite wisdom, did help us there and so we have only been with this new frequency for a year and a half.  So we are kind of in year one of where we thought we would be two years ago.

LISTNUM 1 \l 15118             The only reason I'm bringing this up is because, you know, I know as an owner/operator that you have to know how to run the business smart and lean and we are not sitting here with the biggest expenditures in programming or maybe in some other areas.  We look at synergies.

LISTNUM 1 \l 15119             We know what we are mandated to do, but we also have to make sure that we position ourselves.  I think our business plan is very realistic that way.


LISTNUM 1 \l 15120             Sudbury is ‑‑ I have a lot of respect for Rogers and for Newcap.  Newcap is a minority partner with us in Kitchener.  Whoever gets that licence it is not going to be a walk in the park.

LISTNUM 1 \l 15121             COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 15122             MR. LARCHE:  That's why we position ‑‑ I know I'm rambling a little on your question, but I think that tells you how we are going to set up our staff.

LISTNUM 1 \l 15123             COMMISSIONER del VAL:  No, you are not rambling, because those were areas that I had intended to ask on and so it leads me into those areas.

LISTNUM 1 \l 15124             MR. LARCHE:  All right.

LISTNUM 1 \l 15125             COMMISSIONER del VAL:  But before I go there, before I forget this, this point is just on the staffing of the Sudbury station.

LISTNUM 1 \l 15126             MR. LARCHE:  Yes...?

LISTNUM 1 \l 15127             COMMISSIONER del VAL:  The two news people and three full‑time announcers, do the three full‑time announcers overlap with the two news people at all?

LISTNUM 1 \l 15128             MR. LARCHE:  Yes.  Much in the same way as it was described yesterday by some broadcasters, we have one news person who works in the morning.  They do the on air stuff.  They also do some of the ‑‑ what they will do is, in the afternoon they will work on community clips or they will go cover interviews and do the reporting.


LISTNUM 1 \l 15129             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15130             MR. LARCHE:  Then we have an afternoon person that comes in and they work from noon until 6 o'clock, and then we have part‑time stringers they are called who will also cover City Council meetings and bring stories in for us.  We usually just pay them on a per‑story basis and they come in on weekends.

LISTNUM 1 \l 15131             Our three announcers would be ‑‑ we would have a morning show host who would work from 6:00 to 10:00, then we have a midday person 10:00 to 3:00, and then we have an afternoon drive person who would work from 3:00 to 7:00.

LISTNUM 1 \l 15132             You will ask about voicetracking.  Yes, we will voicetrack in the evening from 7:00 to midnight, but that will be locally produced for that market.  We will also voicetrack overnight.

LISTNUM 1 \l 15133             On weekends we go live from 6:00 a.m. to 6:00 p.m. and we voicetrack in the evenings.

LISTNUM 1 \l 15134             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15135             Is that pretty similar to the setup you have in, say, your Kitchener station?

LISTNUM 1 \l 15136             MR. LARCHE:  More similar to Midland.

LISTNUM 1 \l 15137             Kitchener is a bigger market, it's more competitive, we have more staff there.


LISTNUM 1 \l 15138             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15139             MR. LARCHE:  We have three, you know, three or four people in our morning show in Kitchener.  It is just a much bigger, more competitive market so we have more resources there.

LISTNUM 1 \l 15140             COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 15141             MR. LARCHE:  But this is very, very similar to what our Midland operation is and, again, Midland or that part of Central Ontario and the market we compete in there with Barrie, Orillia, Midland, you know, the population is slightly bigger than Sudbury but the dynamics are not that different.  The format, you know, there is a Rock station FM, there is an AC, there is a Hot AC.

LISTNUM 1 \l 15142             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15143             MR. LARCHE:  So from that respect, other than the fact that in Central Ontario we get a lot of spill from Toronto, so a lot of tuning goes out of the market.  Sudbury there is no spill and it is one of the things I miss from working up there, is at least your competition you can see them.

LISTNUM 1 \l 15144             COMMISSIONER del VAL:  Will there be times that ‑‑ during what times of the 24‑hour day will your Sudbury station be not manned ‑‑ or womaned, sorry?


LISTNUM 1 \l 15145             MR. LARCHE:  Personned?

LISTNUM 1 \l 15146             COMMISSIONER del VAL:  Yes, personned.  Yes.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15147             MR. LARCHE:  Well, I guess assuming the afternoon drive person left right after they are finished at 7:00, you could say from 7:00 until probably the morning people come in at 4:00 or 5:00 the next morning.

LISTNUM 1 \l 15148             But again, this is the way many radio stations operate.  We do know that we have to be on call.

LISTNUM 1 \l 15149             Ted, maybe you might want to talk about some of the things we do to make sure that we can react very quickly if we have to get into the radio station.


LISTNUM 1 \l 15150             MR. ROOP:  In Midland our news director is on call 24/7.  Also, we have given his cell phone number to the police and the fire and the city just in case there are problems.  Actually, we have it set up where our news line is actually forwarded to his cell phone ‑‑ which probably he doesn't like all the time, but it is and there have been times actually when he has been called in.  We have had weather emergencies or other problems, Amber Alerts, and he has been at the station within about five minutes of when that happens.  It is a great system and it works very well for us.

LISTNUM 1 \l 15151             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15152             Automated programming.  What part of the day do you anticipate that you will have automated programming and sort of ‑‑ well, yes ‑‑ or the duration of such programming?

LISTNUM 1 \l 15153             MR. LARCHE:  I'm not sure what you mean by "automated".

LISTNUM 1 \l 15154             COMMISSIONER del VAL:  Voicetrack.

LISTNUM 1 \l 15155             MR. LARCHE:  Voicetrack.  That is 7:00 p.m. through to 6:00 a.m. the next morning.

LISTNUM 1 \l 15156             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15157             MR. LARCHE:  So using the broadcast week, 7:00 p.m. until midnight.

LISTNUM 1 \l 15158             COMMISSIONER del VAL:  All right.  Thank you.

LISTNUM 1 \l 15159             You have the Midland station and the Kitchener station.

LISTNUM 1 \l 15160             What resources do you plan to share with those stations?  What synergies will you have with those stations?


LISTNUM 1 \l 15161             MR. LARCHE:  Well, most of them would be probably more admin.  A lot of them would be administration.  Certainly, you know, our accounting, our traffic scheduling for commercials.  We would definitely centralize that.  Engineering.

LISTNUM 1 \l 15162             In terms of programming, we believe it is important that we have a program director in Sudbury, who lives in Sudbury, who understands Sudbury, but Ted is our Regional Program Director so that he would report through to Ted.  Right now our program director in Kitchener and Ted spend a lot of time on the phone talking about, you know, music ads, and so on so forth, what's going on in the community.

LISTNUM 1 \l 15163             So we would have the three of them working in concert, you know, just talking about what is going on at the radio stations.  But certainly from a news point of view, if there was a major story in one of our other markets that we could send a clip up to we would, but that is certainly not in the plans.  Because again it goes back to we have to be local and you can't be local running Sudbury out of Midland.

LISTNUM 1 \l 15164             COMMISSIONER del VAL:  What about the playlists?

LISTNUM 1 \l 15165             MR. LARCHE:  Do you want to talk to that a little, Ted?

LISTNUM 1 \l 15166             MR. ROOP:  The music playlist?

LISTNUM 1 \l 15167             COMMISSIONER del VAL:  Yes.


LISTNUM 1 \l 15168             MR. ROOP:  Yes.  Our music meetings we do right now with Kitchener and Midland, we match up every Thursday and we get together and talk about our ads and what we are going to add.

LISTNUM 1 \l 15169             There are some local artists that fit in more in Kitchener and vice versa, fit in more in Midland.  For the most part, though, our playlists are the same.

LISTNUM 1 \l 15170             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15171             Now, these are what I call housekeeping items.

LISTNUM 1 \l 15172             Your funds that are earmarked to the Canadian Country Music Association, CCMA, and to the Canadian Music Week, can you just give a breakdown of how much each year to CCMA and how much each year to the CMW?

LISTNUM 1 \l 15173             MR. LARCHE:  I think it's $10,000 per year to each group.

LISTNUM 1 \l 15174             The CCMA is ‑‑ I'm also on the Board of the CCMA, but I have no influence on how they take this money.  Many radio stations contribute money to the fund.

LISTNUM 1 \l 15175             COMMISSIONER del VAL:  All right.


LISTNUM 1 \l 15176             MR. LARCHE:  It is primarily set up to help emerging artists, and often what they do with that money is they will bring new artists to Canadian Country Music Week ‑‑ which is in September and it moves around the country ‑‑ and allow these artists to be showcased at events throughout the weekend.  That's where you have all the record people and radio people together, so it's great money spent for that.

LISTNUM 1 \l 15177             COMMISSIONER del VAL:  StarQuest talent.  How much to that per year?

LISTNUM 1 \l 15178             MR. LARCHE:  That is $10,000 per year.

LISTNUM 1 \l 15179             COMMISSIONER del VAL:  All right, great.

LISTNUM 1 \l 15180             I just want to clarify your commitment to broadcasting of emerging artists.  You said 5 to 10 percent, but I want to know whether it is 5 to 10 percent of Canadian content or 5 to 10 percent of all your music, musical selections.

LISTNUM 1 \l 15181             MR. LARCHE:  It's 5 to 10 percent of all of our musical selections.

LISTNUM 1 \l 15182             COMMISSIONER del VAL:  Your business case.  You said that you expect your station to have minimal impact on current local broadcasters, particularly the country AM station.


LISTNUM 1 \l 15183             What we have right now in the market is Rogers Adult Rock, which targets 18 to 49 years old; their AC station which is 35 to 64; Country, 45 to 64; and then Newcap's Classic Hits which targets about, say, 25 to 49.

LISTNUM 1 \l 15184             So there is quite an overlap between the audience your advertising would be targeted to and those of the existing stations.

LISTNUM 1 \l 15185             Why do you say that it will be "minimal impact"?

LISTNUM 1 \l 15186             MR. LARCHE:  Well, I guess it is how you define "minimal", because I think we did say that 40 percent of our revenue would come from the incumbent stations ‑‑

LISTNUM 1 \l 15187             COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 15188             MR. LARCHE:  ‑‑ which I think is higher than what a lot of other applicants said, so to put that into context.

LISTNUM 1 \l 15189             But country, the way we sell country is we very much sell it as a format that is unique, has a unique loyal type of listener and, you know, we have been ‑‑ Linda and our sales manager in Kitchener have been very successful at it.  We know how to sell country.


LISTNUM 1 \l 15190             I believe some people shy away from country simply because they feel it's a little bit more difficult to sell than maybe one of the more mainstream formats.  We happen to know how to sell it and be successful with it and bring new people to it.

LISTNUM 1 \l 15191             There is no doubt that if we are going to have more impact on one station than any other it would most likely be CIGM, although we don't ‑‑ obviously we don't know how much they are billing.  We know that Rogers does very well.  We know that they combine that station with other stations as they are selling them together, but I think 40 percent ‑‑ again going back to the way we opened this thing ‑‑ is, I think, very realistic.

LISTNUM 1 \l 15192             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15193             Now, Sudbury has the highest retail sales per capita amongst the major Ontario cities, and yet the income per capita is actually ranked substantially lower.

LISTNUM 1 \l 15194             Why do you think that Sudbury's retail market will grow to the extent of being able to support an additional station, let's just say one for now?

LISTNUM 1 \l 15195             MR. LARCHE:  Well, again, I don't have it right in front of me but I know that retail sales growth in Sudbury, if memory serves me right, is tracking about ‑‑ is at 20 percent.  I think it is the highest in that area.


LISTNUM 1 \l 15196             But I think certainly what Wendy Watson talked about yesterday in that market, and Commissioner French, the economics of that market are again very much driven by the price of nickel, and the price of nickel is very strong right now.  Of course, none of us know how long that's going to stay, but certainly the growth going on in China it really positions a market like Sudbury for the long term.

LISTNUM 1 \l 15197             COMMISSIONER del VAL:  I'm glad you referred to the discussion yesterday because that was the part that I was anxious to get to, because you are entering into a market where like in broadcasting terms we call it there is competitive imbalance.

LISTNUM 1 \l 15198             You also heard the exchange, I think yesterday, from Newcap and then also from the Connelly group about sort of the plight of the standalone station.

LISTNUM 1 \l 15199             MR. LARCHE:  Yes.

LISTNUM 1 \l 15200             COMMISSIONER del VAL:  I also noted, quite independent from that, I was going to ask you on the comments that you made in your supplementary brief and also this morning about being the independent entering into such a market.


LISTNUM 1 \l 15201             I would like to hear more about your views on that and the place for the independent broadcaster or station in such a market and how do you plan to conquer the competitive imbalance.

LISTNUM 1 \l 15202             MR. LARCHE:  Great question.

LISTNUM 1 \l 15203             First of all, to start with the importance of an independent ‑‑ and I know you have several independents who are vying for this thing ‑‑ the obvious of course is that we bring a new voice to the market.  We bring a new voice that is not mandated from a head office, can react to the market.

LISTNUM 1 \l 15204             Being a small, independent broadcaster one of the biggest advantages I still believe, beyond what I talked about at the beginning, is that we can make a decision immediately and we can react to something going on in the market and react to any competitive changes.

LISTNUM 1 \l 15205             In terms of competing against the big guys, you know it really gets down to the product you put out.  If you put out a good, local, quality product the person at the other end of the radio doesn't know if it's owned by an independent or if it's owned by a huge multinational company.  They know that they like it because it's good.


LISTNUM 1 \l 15206             Our mandate is always ‑‑ our mission is "MOCHA", "make our customers happy".  Ask them what they want and give it to them.  Asked them what they want and give it to them.  Ask them what they don't want and stop giving that to them.

LISTNUM 1 \l 15207             Doing that has allowed us to compete in markets where ‑‑ again Central Ontario, we are up against two combos there.  You know, there is Corus, we compete against Rogers in Kitchener and CHUM, so we can hold our own as long as we stick true to our values of making sure that we put out a good product.

LISTNUM 1 \l 15208             Just the second answer to that question would be that for us ‑‑ you asked:  How do we compete?  I think the other thing that we have to do is we have to be very realistic in our business plan.  I can come in front of you and I can put all kinds of stuff in my business plan about how much money we are going to spend here and there, and so on and so forth, but often at the end of the day if it is not a conditional licence things can change.

LISTNUM 1 \l 15209             I like to come in with, you know, a business plan that is sound, that would allow us to adapt to any market dynamics and, heaven forbid, a frequency issue like we had in Kitchener.  Again, that is something I think the smaller companies can do a little better.  We don't have a lot of the overhead costs that they do and ‑‑

LISTNUM 1 \l 15210             I don't know if that answers your question.


LISTNUM 1 \l 15211             COMMISSIONER del VAL:  No, that does.  I'm sorry, I gestured as if I was going to interrupt you.  I shouldn't have done that.

LISTNUM 1 \l 15212             But when you were talking about Midland, I just want to know:  Who are you up against in Midland and who are you up against in Kitchener?

LISTNUM 1 \l 15213             MR. LARCHE:  Well, in Midland we are a standalone in the town of Midland, but that part of Ontario, as some Commissioners might know, is considered one region, Midland, Orillia, Barrie, so we very much compete against the stations in those markets.

LISTNUM 1 \l 15214             So Corus has two radio stations in Barrie and there is another independent in Barrie, Doug Bingley who owns two radio stations.

LISTNUM 1 \l 15215             Rogers has a radio station in Orillia.

LISTNUM 1 \l 15216             We have had an affiliation with Rogers through an LSA in the past.  It is probably going to come up so I might as well come and talk about it right now.  This is something that when the new definition came down we felt that we had to break apart and we are in the process of doing that right now.


LISTNUM 1 \l 15217             COMMISSIONER del VAL:  I don't want you to have to disclose any of your own and trade secrets, but say Connelly yesterday referred specifically in terms of their plans to compete or conquer with lower advertising rates, targeting the smaller businesses, and we all know about being local, local, local.

LISTNUM 1 \l 15218             Do you have any sort of specific plans on competing?  Do you intend to come in with, say, lower advertising rates, or do you have any plans on who you are going to target?

LISTNUM 1 \l 15219             MR. LARCHE:  Heavens, no!

LISTNUM 1 \l 15220             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 15221             MR. LARCHE:  No, we wouldn't come in with lower advertising rates.  Low rates ‑‑ radio is undervalued in general and certainly low rates do not ‑‑ it's just not good for the business.  Radio ‑‑ and I'm not talking about just for us, for any radio ‑‑ should always be striving to get what it is worth, particularly as it competes against television or print for example.


LISTNUM 1 \l 15222             But we don't have any specific secrets when it comes to doing business in terms of doing stuff different, other than what we already do and what we stand for.  Again going back to MOCHA, our sales philosophy ‑‑ and maybe Linda can talk about it for a second ‑‑ but we really want to find out what the advertiser's problems are and then we like to come back and help them with a marketing plan that is based on addressing the problems that they are having.

LISTNUM 1 \l 15223             So we spend a lot of time in our sales department training our staff on advertising.  We try to consider ourselves advertising experts, not just radio experts, what works in advertising, what doesn't, you know, creative.  Creative has to be emotional versus factual for it to register with a listener.

LISTNUM 1 \l 15224             So our approach is not necessarily one of "We are a country station".  We come to a client and what we do is we want to partner with them to help their advertising be successful.  We more often than not would say "You should not just advertise with us, you have to advertise with, you know, two or three radio stations.  Let's find out what your needs are."  We come back with a plan and that has made us very successful.

LISTNUM 1 \l 15225             Linda, do you have anything to add to that?


LISTNUM 1 \l 15226             MS YOUNG:  The only thing I would like to add is, I think what makes us different than other radio stations is our clients are many times coming to us asking us for advice and they know we are going to give them the honest answer.  If they are asking us, you know, "What should I be doing?  Should I be doing television?  Should I be dealing newspaper?  Should I be doing another radio station?", we really do have an overall marketing plan for them and it is a great feeling to know that they are calling you because they really do think your team, our management team as well as our sales team, are experts in the market.  That is the same thing we would do in Sudbury.

LISTNUM 1 \l 15227             COMMISSIONER del VAL:  Thank you very much.  Thank you for your time.

LISTNUM 1 \l 15228             Those are my questions, unless you have something to add to Ms Young's answer, Mr. Larche?

LISTNUM 1 \l 15229             Thank you.

LISTNUM 1 \l 15230             MR. LARCHE:  No, I'm fine.  Thank you.

LISTNUM 1 \l 15231             COMMISSIONER del VAL:  Those are my questions, Madam Chair.

LISTNUM 1 \l 15232             Thank you.

LISTNUM 1 \l 15233             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15234             Vice Chairman Arpin..."

LISTNUM 1 \l 15235             COMMISSIONER ARPIN:  Thank you, Madam Chair.

LISTNUM 1 \l 15236             A few questions, Mr. Larche and Mr. Roop.  I will start with synergies.


LISTNUM 1 \l 15237             When I heard Mr. Roop replying regarding the music playlists and the discussions that he was having with the program people in Kitchener on a weekly basis, his answer prompted my attention.

LISTNUM 1 \l 15238             Are you producing a Central music log?

LISTNUM 1 \l 15239             MR. ROOP:  No, we produce our own music logs in Kitchener and Midland and we would produce our own in Sudbury as well.

LISTNUM 1 \l 15240             COMMISSIONER ARPIN:  In Sudbury.

LISTNUM 1 \l 15241             MR. ROOP:  It's kind of nice to have ‑‑ well, two heads are better than one, so when we are doing our music meetings ‑‑

LISTNUM 1 \l 15242             COMMISSIONER ARPIN:  Yes, okay.  So I can understand that.

LISTNUM 1 \l 15243             MR. ROOP:  Yes.

LISTNUM 1 \l 15244             COMMISSIONER ARPIN:  Obviously it allows you to discuss new ‑‑

LISTNUM 1 \l 15245             MR. ROOP:  Exactly.

LISTNUM 1 \l 15246             COMMISSIONER ARPIN:  ‑‑ entries and to share views.

LISTNUM 1 \l 15247             Regarding other aspects like traffic, accounting, will it be centralized somewhere or will it be done in each of the stations?


LISTNUM 1 \l 15248             MR. LARCHE:  Traffic, scheduling commercials traffic, would be centralized.  We do that currently.  Even for Kitchener we do it out of Midland.  The technology allows us to very easily do that.

LISTNUM 1 \l 15249             COMMISSIONER ARPIN:  I see.

LISTNUM 1 \l 15250             And accounting ‑‑

LISTNUM 1 \l 15251             MR. LARCHE:  Accounting as well.

LISTNUM 1 \l 15252             COMMISSIONER ARPIN:  ‑‑ billing and collections and everything, that is done centrally as well?

LISTNUM 1 \l 15253             MR. LARCHE:  Well, we have our sales reps do the collections.

LISTNUM 1 \l 15254             COMMISSIONER ARPIN:  I'm sure, yes, but ‑‑

LISTNUM 1 \l 15255             MR. LARCHE:  But, yes.  That only makes good business sense for us and, again, technology allows us to do that.

LISTNUM 1 \l 15256             COMMISSIONER ARPIN:  All right.  That's what I wanted.

LISTNUM 1 \l 15257             In your oral presentation at the top of page 5 you quoted that you were in support of the CAB intervention at this hearing regarding emerging artists and regulatory mechanism.

LISTNUM 1 \l 15258             The CAB has put forward a definition of what they will call an emerging artist, but they also say in their brief that it might not be the optimum definition at some point in time.


LISTNUM 1 \l 15259             Since you are saying that you are supporting the intervention, what are you really supporting?

LISTNUM 1 \l 15260             MR. LARCHE:  I am supporting the spirit of the intervention.  I really believe that all the stakeholders have to get together and come up with some definitions that would be acceptable to the CRTC.  We hope that ‑‑ and now I am speaking a little bit for the CAB because I am on the Radio Board ‑‑ the CAB hopes that we can get some dialogue going with the Commission to come up with some standards and some definitions and a mechanism that is very clear.

LISTNUM 1 \l 15261             Because right now, as you could tell by the line of questioning over the last few days, it is a little bit gray.  Frankly, we are not even 100 percent sure exactly how it works or how it will be measured.

LISTNUM 1 \l 15262             COMMISSIONER ARPIN:  So what you are supporting is that somewhere there has to be flexibility.

LISTNUM 1 \l 15263             MR. LARCHE:  There has to be.

LISTNUM 1 \l 15264             COMMISSIONER ARPIN:  It's not a one‑size‑fits‑all.


LISTNUM 1 \l 15265             MR. LARCHE:  No.  I think in our deficiency question when it came up, we also made the point very clear that no one has a better track record in country than we do, I think, for emerging artists and we can compare our emerging artists airplay to others looking at it through a BDS, and so on.  But we don't control the supply.  That's a big concern that we have.

LISTNUM 1 \l 15266             I can't speak for other formats, but in country it is a very cyclical flow of when stuff comes out.  There seems to be certain times of year where, you know ‑‑ for example around Canadian Country Music Week where everybody will be releasing something new, and then we can go through some dry spells and then we can go through a period where there is a lot of goods.

LISTNUM 1 \l 15267             So we don't like to limit ourselves on what we play.  If there is a lot of good stuff we want to play all of it, but if there is nothing coming out over the course of a three or four‑week period, then that concerns us a lot to have a quota.


LISTNUM 1 \l 15268             I proposed in my note back to the Commission that if you do impose something like this as a condition of licence, I would propose that the Commission consider averaging it over the course of a year.  So take 52 weeks of what you are doing and divide it by 52, because there will be times a year where we can play more than other times of the year.

LISTNUM 1 \l 15269             That is, of course, just a very humble suggestion, but I think it ties into what the CAB wants to sit down and talk about as well.

LISTNUM 1 \l 15270             COMMISSIONER ARPIN:  We may have to quadruple the number of staff, and even more than that if we start to monitor on a yearly basis.  We already have a hard time doing it on a weekly basis.  As you know, we sample a day and multiply by five or sometimes by seven, so if we were to do it a yearly basis we are going to be told that were running an empire.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15271             MR. LARCHE:  Well, I don't have all the answers, I'm sorry.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15272             COMMISSIONER ARPIN:  All right.  Thank you for that aspect.

LISTNUM 1 \l 15273             You answered that Diane was 39 and Jack was 41, if my memory serves me well, so I guess that your primary target would then be 35‑44?

LISTNUM 1 \l 15274             MR. LARCHE:  That's correct.

LISTNUM 1 \l 15275             COMMISSIONER ARPIN:  That's correct.


LISTNUM 1 \l 15276             Finally, how many stations do you think the Sudbury market could afford at this time?  There currently are four commercial stations ‑‑ five, because the French radio station is also commercial.  But on the English‑speaking side we are talking about four commercial radio stations.

LISTNUM 1 \l 15277             I will help you with my secondary question, if I may.

LISTNUM 1 \l 15278             If the answer is more than one ‑‑

LISTNUM 1 \l 15279             MR. LARCHE:  I know it's coming.

LISTNUM 1 \l 15280             COMMISSIONER ARPIN:  If the answer is more than one, which one will have the least impact on your business plan and which one will have the most impact on your business plan?

LISTNUM 1 \l 15281             MR. LARCHE:  Again, when we talked about the economics of Sudbury and where it's at, there is some in balance in the sense of ‑‑ particularly after Newcap shared with us yesterday that they only pick up 10 percent of that EBIT, certainly the market is profitable, but it certainly seems like a good chunk of it is going to the major player there.  Again, that is no surprise, they are smart broadcasters and they know what they are doing.

LISTNUM 1 \l 15282             I would hope it's one, but I know that if you are following the Broadcast Act and the numbers that are out there right now you will license two, so if it is two, yes, we would certainly want to be one of the two.


LISTNUM 1 \l 15283             In terms of which one would have the least impact on us, certainly from a programming point of view it would be Newcap because they are targeting youth and we are not, so certainly from a "business point of view, advertising point of view", we wouldn't really be competing with them on a dollar sense, however, we would be competing against a combo and a trio.

LISTNUM 1 \l 15284             You know, I have no illusions that whoever gets this, the first few years particularly are going to be tough and I think it's very important that whoever you put in there ‑‑ and, like I say, there are some great applications, please have good confidence that you feel that they can do it because it can ‑‑ as we found it in Kitchener, if you get a couple of hiccups it get can really shake you up, let alone your banker.

LISTNUM 1 \l 15285             COMMISSIONER ARPIN:  Well, Madam Chair, those were my questions.

LISTNUM 1 \l 15286             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15287             Legal counsel.

LISTNUM 1 \l 15288             MS DIONNE:  I have two questions regarding your contribution to Canadian development.

LISTNUM 1 \l 15289             I know you understand in your basic contribution that will be applied by way of regulation.


LISTNUM 1 \l 15290             As for your over and above commitment that we like to call as over and above ‑‑

LISTNUM 1 \l 15291             MR. LARCHE:  It's a good term.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15292             MS DIONNE:  ‑‑ you propose to allocate 40 percent of your over and above to FACTOR.

LISTNUM 1 \l 15293             I just want to clarify whether you would accept this as a condition of your licence?

LISTNUM 1 \l 15294             MR. LARCHE:  Yes.

LISTNUM 1 \l 15295             MS DIONNE:  Regarding your contribution to StarQuest Talent Search of $10,000, could you provide a breakdown of the actual amounts?

LISTNUM 1 \l 15296             I think you want to spend amounts to hard costs like equipment, rentals, studio time and production of CDs, so what would these amounts be?

LISTNUM 1 \l 15297             MR. LARCHE:  $2,500 for the venue, stage, sound, lights; $5,000 for the recording session, the studio that the person would go to; and another $2,500 would go for the reproduction of the CDs and distribution.

LISTNUM 1 \l 15298             MS DIONNE:  Thank you, Madam Chair.

LISTNUM 1 \l 15299             THE CHAIRPERSON:  Mr. Larche, just a couple of questions with regards to emerging artists.


LISTNUM 1 \l 15300             I note your commitment to emerging artists in your current markets of Kitchener and Midland, do you play emerging artists from Kitchener in Midland and vice versa?

LISTNUM 1 \l 15301             Therefore, the second part of the question is:  Whatever you do in those two markets are you going to do that with Sudbury, if licensed?

LISTNUM 1 \l 15302             MR. LARCHE:  Well, certainly emerging artists, a good emerging artist we will play on all stations, you know, if it's good music.  It doesn't matter if they are local or from Edmonton or whatever if they are good.

LISTNUM 1 \l 15303             But to answer your question, yes, we do.  We have some great country artists in both the markets that we work in and that is one of the benefits, is we have been able to play their music and expose it in a market that isn't their home market.

LISTNUM 1 \l 15304             Ted, give us some examples.  We have Cathy Corpi.

LISTNUM 1 \l 15305             MR. ROOP:  Yes, there is an artist named Cathy Corpi who is a local artist in Midland who gets airplay in Kitchener and she is just starting out and doing quite well.


LISTNUM 1 \l 15306             Carla Crawford is another one that is a local from Midland that is making it down in Kitchener now because she is having airplay on our radio station down there.  She doesn't get very much exposure anywhere else so it is helping her out a lot, too.

LISTNUM 1 \l 15307             Then it happens the same way, that artists from Kitchener are getting airplay in Midland.  Jason Blaine is one of those, and his career has really actually taken off in the last year, which is really good for him.

LISTNUM 1 \l 15308             Yes, local artists down there, Jamie Warren, Beverley Mahood, things like that.

LISTNUM 1 \l 15309             THE CHAIRPERSON:  And they will make it up to Sudbury.

LISTNUM 1 \l 15310             MR. ROOP:  They would all be playing in Sudbury, too, and then Sudbury would be playing in Kitchener and Midland as well.

LISTNUM 1 \l 15311             THE CHAIRPERSON:  I can't resist, Jack and Diane?  Are you going to launch with John Couger Mellencamp?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15312             THE CHAIRPERSON:  Those are all our questions.

LISTNUM 1 \l 15313             You have two minutes to summarize your application and tell us why this service is the best use of the frequency in Sudbury.

LISTNUM 1 \l 15314             MR. LARCHE:  Thank you.


LISTNUM 1 \l 15315             I probably won't even use up my two minutes.

LISTNUM 1 \l 15316             I think there are five good, compelling reasons for you to consider us.

LISTNUM 1 \l 15317             The first one is that we are really going to fill the biggest unserved mass appeal format in that market and, contrary to the thought that we may not be increasing diversity, we will be increasing diversity was again a mainstream format.  Country is a mainstream format now.  It is ranked third or fourth in Canada, depending on where you are geographically.  Sudbury deserves a mainstream FM country station.

LISTNUM 1 \l 15318             The second point is, I think again our business plan, it's sound, it's realistic, it's made to adapt to the market forces.  We can ensure that we can live up to all of the commitments that we are making here and we can also run a business that will be profitable for us in the long term, but also give to the market what it wants.


LISTNUM 1 \l 15319             I think we have some great local initiatives that we are proposing.  We very much want to reflect the culture of the market.  Part of the culture in Northern Ontario and, frankly, in Central Ontario again is recreation, hunting, fishing, outdoors, snowmobiling, and we take that very seriously.  Ted has done his morning show from his fishing hut.  People love that stuff.  You have to get into what people eat, live and breathe in those communities and reflect it and I think we do that better than anyone.

LISTNUM 1 \l 15320             I think we have a very good CCD proposal.  I think it might rank ‑‑ I think it is tied for second or maybe even a little higher with the additional funds that we were asked to contribute to it.

LISTNUM 1 \l 15321             Finally, again, I think our company, we want to grow.  We want to grow and we think that we can contribute a lot to the system over the next few years.

LISTNUM 1 \l 15322             There is more consolidation that seems to be coming down the road.  Again, I think there were some great new broadcasters that were up in front of you today and, you know, we wish them luck, but I think we have the track record to tell you that we can deliver and we will deliver.

LISTNUM 1 \l 15323             So those are our reasons and we thank you for the opportunity.

LISTNUM 1 \l 15324             THE CHAIRPERSON:  Mr. Larche and your colleagues, thank you very much for your participation today.


LISTNUM 1 \l 15325             We will now be taking a 15‑minute break.  We will resume at 10:25.

LISTNUM 1 \l 15326             Thank you.

‑‑‑ Upon recessing at 1010 / Suspension à 1010

‑‑‑ Upon resuming at 1035 / Reprise à 1035

LISTNUM 1 \l 15327             THE CHAIRPERSON:  Order, please.

LISTNUM 1 \l 15328             Madam Secretary.

LISTNUM 1 \l 15329             THE SECRETARY:  We will now proceed with Item 18 on the Agenda, which is an application by the Haliburton Broadcasting Group Inc. on behalf of a corporation to be incorporated for a licence to operate an English‑language commercial FM radio programming undertaking in Sudbury.

LISTNUM 1 \l 15330             The new station would operate on frequency 88.5 MHz, Channel 203C, with an effective radiated power of 50,000 watts, non‑directional antenna, antenna height of 145 metres.

LISTNUM 1 \l 15331             Appearing for the applicant is Mr. Christopher Grossman who will introduce his colleagues.  You will then have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 15332             MR. GROSSMAN:  Good morning, Madam Chair and Commissioners.  My name is Christopher Grossman and I am the President of the Haliburton Broadcasting Group Inc.


LISTNUM 1 \l 15333             Before we begin our presentation, please allow me to introduce the individuals with me on the panel.  Bill Evanov is the President of Evanov Communications Inc., formally the Evanov Radio Group, which is the co‑applicant.

LISTNUM 1 \l 15334             Beside bill is Carmela Laurignano, Vice President and Radio Group Manager for ERG.

LISTNUM 1 \l 15335             Behind her is Sean Moreman, in‑house counsel for ERG and Controller for PROUD‑FM, the world's first commercial radio station targeted at gays and lesbians.

LISTNUM 1 \l 15336             Sitting beside Sean is Gary Gamble, the Corporate Program Director with ERG.

LISTNUM 1 \l 15337             Behind me is Paul Evanov, Vice President Operations of ERG.

LISTNUM 1 \l 15338             Beside me, on my left, is Wendy Grey, who is the Corporate News Director for the Haliburton Broadcasting Group.

LISTNUM 1 \l 15339             In this era of consolidation, both Haliburton and ERG are strong, independent broadcasters who have built reputations for serving under‑represented markets based on age, as in the case of the Jewel in Ottawa; language as in the case with CHYC in Sudbury, or on sexual orientation, as with PROUD‑FM in Toronto.


LISTNUM 1 \l 15340             As you will see, this application continues that reputation, as we are proposing a strong business model that intends to serve the mature audience in Sudbury.

LISTNUM 1 \l 15341             Our company, Haliburton, has been in operation for the 10 years.  Since the beginning, our mandate has been to revive and operate successful radio stations in Northern Ontario in a way that other broadcasters have not been able to achieve.

LISTNUM 1 \l 15342             One of the first ventures was in the Sudbury market, which allowed us to reinvest in the northern radio markets and to grow to the 15‑station operation we are today, including the existing French‑language service in Sudbury.  We have a map showing these stations included in our package.

LISTNUM 1 \l 15343             Our French station in Sudbury is really the driving force behind the remainder of the Haliburton French cluster.  The synergies offered by this application to the French network will only serve to strengthen it.  As a result, we are more able to move money into less profitable markets in order to deliver quality programming across the region.


LISTNUM 1 \l 15344             Through the synergies available with the English station we propose, both the new station and the existing station will be able to remain competitive in an industry that is becoming even more consolidated.

LISTNUM 1 \l 15345             Mr. Evanov has been in the radio business for over 30 years and operates stations in small, medium and major markets across Canada.  The philosophy of the Evanov Radio Group is to serve under‑represented markets at each end of the demographic scale, and now the LGBT market.  Two of the Evanov stations, the Jewel in Ottawa and CKDX‑FM in Newmarket, serve the 45‑plus age bracket and offer a similar format to the one we are proposing for Sudbury.

LISTNUM 1 \l 15346             When the call for a new service in Sudbury was released, we were very excited at the prospect of expanding our presence in Sudbury and to fulfil our mandate of providing quality service to an under served market with an English‑language service.  We felt that with our experience in building a radio network across Northern Ontario, we would be able to develop a sound business plan that would properly serve the community.

LISTNUM 1 \l 15347             When we evaluated the market, we determined that the most popular demographic, 18 to 45‑year‑olds, is well served by the existing stations.  In the 18 to 34 bracket, they have seen a 60 percent increase in tuning from 2004 to 2006.


LISTNUM 1 \l 15348             What became clear to us was that the radio service in the market was not addressing the needs of the 45‑plus listener and that they were tuning out as a result.

LISTNUM 1 \l 15349             We are aware of the success that Bill has had with today's Easy Listening format in Ottawa and Newmarket and I approached him to develop a similar model that would meet the needs of Sudbury radio listeners.

LISTNUM 1 \l 15350             The Jewel in Ottawa was able to undo a lot of listener dissatisfaction in the older demo and hours tuned increased 31 percent in the 55‑plus demographic in the one year since the station was launched.

LISTNUM 1 \l 15351             It is that dialogue that led us to where we are today.  We feel that together we are able to bring diversity of editorial voice and ownership to a market to address the needs of Sudbury's under served 45‑plus radio listener.

LISTNUM 1 \l 15352             In addition to our French language service, the Sudbury market is also served by four major commercial English radio stations, as well as the CBC.  Newcap's Classic Hits format, Rogers Easy Rock, Classic Rock and AM Country Music, Sports and Talk station.


LISTNUM 1 \l 15353             Of all the stations currently serving the Sudbury market, only the AM station is successful in attracting a majority of its listeners from the 50‑plus demographic and the top‑rated 50‑plus Station, CJMX‑FM, attracts only 37 percent of its cume rating in that demo.  This fact is somewhat surprising, given the average age in Sudbury is above the national average and that 40 percent of the population in the market is over the age of 45.

LISTNUM 1 \l 15354             Combining the age factor in Sudbury with the fact that no FM music station successfully targets that demographic, we expected to find dissatisfaction with radio in Sudbury amongst the older age group.

LISTNUM 1 \l 15355             That is exactly what we discovered in our market research.  Less than one quarter of the people aged 40‑plus said that they were satisfied with the radio offerings in the Sudbury market.  Fifty‑six percent of the people stated that they would listen to radio more if there was something on the dial that appealed to them.


LISTNUM 1 \l 15356             Although Sudbury has seen an increase in radio tuning amongst most age groups over the last two years, that growth has been significantly lower among the older demographic.  There has been no growth whatsoever among the 65‑plus age group.

LISTNUM 1 \l 15357             This tepid response to radio amongst the 45‑plus demographic is due largely to the lack of variety being offered by the stations in the market.

LISTNUM 1 \l 15358             We feel strongly that Diamond 88.5 will provide the variety and will appeal to the older demographics in order to bring them back to radio.

LISTNUM 1 \l 15359             Bill will tell you exactly how the playlist on Diamond 88.5 will speak to those older listeners.

LISTNUM 1 \l 15360             MR. BILL EVANOV:  The format we are proposing for the Diamond is Today's New Easy Listening, a format of world‑class music we pioneered and made successful with our Newmarket station.

LISTNUM 1 \l 15361             This format was recently introduced to the Ottawa market as The Jewel.  The essence of the format is to play the best soft melodic music from many eras with lyrics that might be meaningful and touch something within the listener relating to life experience, memories, lifestyle or simply feel good.


LISTNUM 1 \l 15362             Because we blend a variety of music genres from different eras, we are not in a time warp, nor do we sit still.  We move from era to era.  It is exciting to hear this variety:  "Summer Wind" by Frank Sinatra from the '60s followed by a Barbra Streisand "The Way We Were" from the '70s, perhaps Toni Braxton from the '90s, "Cold Cold Heart" by Norah Jones from the era 2000, or in instrumental by Richard Abel or André Gagnon, and then a classic duet by Tony Bennett with Celine or K.D. Lang.

LISTNUM 1 \l 15363             Ninety percent of the music we will bring to Sudbury is not heard on existing stations.  A list of artists that have not been heard in Sudbury in the last month is in your package.

LISTNUM 1 \l 15364             Of all the applicants before you, we have made the highest commitments to Canadian music and emerging artists.  We will play 40 percent Canadian content at all times.  As well, we will play 40 percent emerging artists, such as Susie Arioli, who sang, "I'll Never Smile Again; Michel Berube "Lotta Love"; Rick Sonata "Bewitched", or Carol Welsman's "Fever".

LISTNUM 1 \l 15365             These Canadian artists will be complemented by the great American songbook artists Carly Simon, Rod Stewart, Barry Manilow and Bette Midler, all of whom, as a world renowned performers, realized that they, like their audience, were progressively getting older and that their music tastes have changed and elevated to a softer melodic sound with meaningful lyrics.


LISTNUM 1 \l 15366             This is the reason our proposed format is ideal for Sudbury.  Sudbury, just like these artists, and the aging baby‑boomer generation, has become older, as indicated by StatsCan and our research.  It will continue to get older as the baby‑boomer bubble travels from the 50 age demo up to the 60 age demo and beyond.

LISTNUM 1 \l 15367             Every hour of the day will feature Canadian instrumental artists such as Richard Abel performing "Offenbach's Bacarolle" and new emerging instrumental artists Howard Lopez or Alan Burlon performing pop classics.

LISTNUM 1 \l 15368             We know that as radio stations narrowed their playlists to fit the more rigid youth formatting, instrumental music on radio saw a drastic decline in the mid to late '70s.  Despite the decline in radio play, there is still a strong demand for instrumental music.  Seventy‑nine percent of people we surveyed who said they would definitely listen to the Diamond also expressed an interest in the instrumental music.

LISTNUM 1 \l 15369             Instrumental musicians, they exist across the country in every village, every town, every city.  They perform at private functions, at weddings, at Bar Mitzvahs, at concerts, in clubs and, in many cases including Sudbury, in symphony orchestras.


LISTNUM 1 \l 15370             Instrumental music is very much alive and yet, because it is being ignored by radio, it has been forced to operate as a cottage and basement industry.  The artists produce, they market and sell their recordings themselves via the internet, flea markets, small concerts or through word‑of‑mouth.

LISTNUM 1 \l 15371             We cannot ignore a form of music that has existed for centuries.  Surely, we cannot deny future generations the opportunity to hear instrumental music.  Today our stations in Newmarket and Ottawa provide exposure for this music.  We believe that, as our research points out, Sudbury would welcome this opportunity.

LISTNUM 1 \l 15372             Our instrumentals are uplifting.  They are fresh and definitely foreground.  They engage the listener, they invoke passion and emotion.  A sample of a broad variety of instrument music could include a Strauss waltz performed by André Rieu, or "Penny Lane" performed by the Boston Pops.  It could be emerging artists Jacques Duguay performing "My Elusive Dreams" or Paul Blissett performing  "Annette".

LISTNUM 1 \l 15373             As an additional way to showcase new Canadian and instrumental talent, the Diamond will have features geared to that end.  Paul Evanov will tell you more about those elements.


LISTNUM 1 \l 15374             MR. PAUL EVANOV:  Two of our features have been put into our program schedule in order to highlight new Canadian artists.  The "Canadian Spotlight" is an hour long show that will present the work of a new Canadian artists performing in the vocal or instrumental style.  During the feature, the host will discuss the artist's background and other relevant facts that are of interest to the listener.  Where possible, we will invite the artist into the studio for live one‑on‑one discussion.  Naturally, we will also play a selection of works by that artist during the hour.

LISTNUM 1 \l 15375             The "Canadian Spotlight" segment is scheduled to play on Saturday afternoon.  Mindful of the nature of shift work that accompanies the mining industry, we will re‑air the segment on Sunday mornings.


LISTNUM 1 \l 15376             The second feature focuses on instrumental talent.  The "After Nine" program is designed to run in the evening and is meant to appeal to a listener who wants to sit back and relax to some soothing music.  Although not exclusive to Canadian artists, this feature will draw on many of the artists who have signed on to our Catalogue of Canadian Instrumental Music, which Carmela will be addressing shortly.

LISTNUM 1 \l 15377             In brief, the catalogue provides a vehicle for instrumental musicians to get their work out, and the format we are proposing is a perfect fit for that type of music.

LISTNUM 1 \l 15378             We feel each of these features demonstrates that it is possible to have high quality programming that showcases new talent, while at the same time meets and exceeds minimum levels of Canadian Content requirements.

LISTNUM 1 \l 15379             I will pass things over to Wendy Gray to talk about other spoken word elements of our programming.

LISTNUM 1 \l 15380             MS GRAY:  As is the case in many northern markets, local news and information scored very important to 67 percent of the people of Sudbury.  Consequently, the newsroom at Diamond 88.5 will deliver an above average local component of 50 percent.  Listeners will be able to access information about what is happening in and around the Greater Sudbury Area 20 times per day from Monday to Friday.


LISTNUM 1 \l 15381             The lifestyle in northern Ontario sees people travelling from one town to another, either to visit family or to take advantage of some event that may be happening in another northern community.  Consequently, listeners want to know what there is to do in their region, as well as what is happening in the Greater Sudbury Area.

LISTNUM 1 \l 15382             To meet that need, we have scheduled a community calendar segment four times daily which will include events in Sudbury, but will also extend farther afield to areas such as Timmins and North Bay.

LISTNUM 1 \l 15383             Natural resources play an important role in the Sudbury market.  Recognizing the importance of Inco and X‑Strata to the local community, and Tembec and Domtar to the Northern Ontario region, we will air a business report twice daily focusing on local, national and international business news.


LISTNUM 1 \l 15384             As people age, health issues become more and more important.  Diamond 88.5 is targeting a more mature demographic and Sudbury is a Regional Health Centre for over 600,000 Northern Ontario residents seeking an acute, transitional, rehabilitation or cancer care.  Haliburton Broadcasting is the only applicant with radio stations in the surrounding communities that depend on Sudbury for health services.  Simply put, if you need cancer care, treatment for heart disease or mental health care in Elliot Lake, you will most likely be travelling to Sudbury for that care.  And once in Sudbury, those same residents can depend on a familiar voice to deliver relevant health information once a day during the lunch hour.

LISTNUM 1 \l 15385             We feel strongly that both the musical and spoken word programming will appeal to our target demographic and that we will have a solid listenership as a result.  Christopher Grossman will address how these numbers will impact on sales and the overall financial health of Diamond 88.5.

LISTNUM 1 \l 15386             MR. GROSSMAN:  Due to a revived interest in natural resources, Sudbury has seen a population growth in recent years.  Large companies such as Inco and X‑Strata have invested large sums of money in Northern Ontario.  This new job creation in the resource sector is fuelling housing starts and other industries such as medicine.  Because of this renewed investment, the net migration is on the increase as people who have left are returning to Sudbury.


LISTNUM 1 \l 15387             Overall, the Sudbury market is strong.  Retail sales in Sudbury far outpace the rate of inflation.  The radio PBIT in Sudbury has increased 60 percent since the year 2000.  The total radio market is worth $10 million.  We project that 75 percent of our revenue will come from new advertisers.  We expect to bring disenfranchised advertisers who target the more mature consumer back to radio.

LISTNUM 1 \l 15388             Edward Jones Group, Belanger Design Studio in the Sudbury Symphony Orchestra have all told us that they would be interested in advertising on a station that delivers the 50‑plus demographic.

LISTNUM 1 \l 15389             The remaining 25 percent of our initial revenue will come from existing stations.  The initial impact represents only 2 percent of the total market spend and we expect he will eventually be replaced as new advertisers expand their budget.

LISTNUM 1 \l 15390             As with all radio applications, we have allocated a portion of these revenues to be committed to Canadian Content Development.

LISTNUM 1 \l 15391             Carmela will tell you about some of the proposed CCD initiatives.

LISTNUM 1 \l 15392             MS LAURIGNANO:  You will note from our application that our CCD plan far exceeds the direct minimum requirements imposed by the revised Commercial Radio Policy.  We believe our CCD plan shows our commitment to developing Canadian content and talent.


LISTNUM 1 \l 15393             We are sensitive to the strong Francophone presence in Sudbury.  I believe we are the only applicant to have dedicated over $10,000 per year to MUSICACTION in order to develop Francophone talent in the region.

LISTNUM 1 \l 15394             In addition to our commitment to MUSICACTION, we continue to be dedicated to the Catalogue of Canadian Instrumental Music.  This initiative, worth close to $1 million was first approved by the Commission when we applied for our licence in Ottawa.  Since that time, we have developed the web‑based site and have started to register members.  We now have over 1,000 records in the database.  The soft launch of the website is scheduled for mid‑April.

LISTNUM 1 \l 15395             We are also planning an advertising campaign, including print and internet‑based advertisements in trade magazines to begin in June.  In the coming month, we will also be inviting existing members to add the balance of their work to the catalogue.

LISTNUM 1 \l 15396             We intend to make the database available to the film and television industry come the fall, so that they may source new and exciting instrumental music for their works.

LISTNUM 1 \l 15397             It is to these aspects of the catalogue that we are dedicating over $90,000 during the term of the licence.


LISTNUM 1 \l 15398             Given the strong number of aboriginal people in Northern Ontario, we have committed monies to two projects that will help to develop aboriginal talent.  The first of these projects is at Laurentian University and the second is the Aboriginal Media Education Fund.

LISTNUM 1 \l 15399             Laurentian University runs a communications program which covers all areas of broadcasting, including broadcast journalism.  As a requirement of the program, all students must take at least one course in aboriginal cultural studies.  We have committed $5,000 per year to be given to the program over the seven years of the licence term.

LISTNUM 1 \l 15400             The Aboriginal Education Fund is an an initiative which has, as its mandate, to foster a talent pool that will create, produce, distribute, market and broadcast programming that is relevant in today's aboriginal society, both nationally and internationally.  We have committed $10,000 per year over the seven years of the licence term to this initiative.

LISTNUM 1 \l 15401             Lastly, we have set aside $10,000 per year to promote Canadian talent at Canadian Music Week.


LISTNUM 1 \l 15402             Our total CCD package over the seven‑year licence term, in direct benefits alone, is $350,000.

LISTNUM 1 \l 15403             MR. GROSSMAN:  As you have heard, there is a gap in the Sudbury market that needs to be filled.  The 45‑plus demographic has stated they are unhappy with the radio service being provided to them.  Diamond 88.5 will change that situation.  With our blend of music from the last five decades as well as a combination of locals and instrumentals, our station will appeal to a more mature market and give them what they want.  Not only will our listeners be happy with the end product, but advertisers will also benefit from today's Easy Listening format which delivers an upscale, more mature market.

LISTNUM 1 \l 15404             Let's review the key benefits of this application.

LISTNUM 1 \l 15405             Number one, this application is a strong marriage of two very experienced independent broadcasters who will bring editorial, ownership and format diversity to the Sudbury market.

LISTNUM 1 \l 15406             Diamond 88.5 will repatriate lost tuning in the older demographic, as we have seen in The Jewel in Ottawa.

LISTNUM 1 \l 15407             This format in Sudbury will see increases in total advertising spending as new advertisers tap into the mature audience we create.


LISTNUM 1 \l 15408             Through the synergies created, both Haliburton and ERG will continue to provide quality programming to the under served communities.

LISTNUM 1 \l 15409             And, finally, Haliburton will be able to strengthen its French network.

LISTNUM 1 \l 15410             Diamond 88.5 will inject $350,000 into CCD benefits that will deliver hundreds of new and emerging Canadian artists to the Sudbury airwaves over the term of the licence.

LISTNUM 1 \l 15411             Before we go to questions, we have one in brief housekeeping matter to address.

LISTNUM 1 \l 15412             Sean...?

LISTNUM 1 \l 15413             MR. MOREMAN:  Yes.  As a matter of housekeeping, in our most recent reply to deficiencies there was a small mathematical error.  That error has been corrected and filed with the Secretary and does not impact on anything that was in the presentation.

LISTNUM 1 \l 15414             MR. GROSSMAN:  Thank you.

LISTNUM 1 \l 15415             This concludes our presentation and we would be pleased to answer any questions that you may have.

LISTNUM 1 \l 15416             THE CHAIRPERSON:  Thank you very much.

LISTNUM 1 \l 15417             Commissioner Cram...?

LISTNUM 1 \l 15418             COMMISSIONER CRAM:  Thank you.


LISTNUM 1 \l 15419             I will address my questions to you, Mr. Grossman, and you can direct them wherever you want.

LISTNUM 1 \l 15420             MR. GROSSMAN:  All right.

LISTNUM 1 \l 15421             COMMISSIONER CRAM:  I must say, this end of the table was getting very depressed when Mr. Evanov was talking about the fact that we are getting older.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15422             COMMISSIONER CRAM:  I'm sort of having a hard time getting over the slight bit of depression caused by that thought.

LISTNUM 1 \l 15423             Anyway, you are targeting a 45‑plus audience you say, and I found it interesting in your talk, you talked about "upscale" older people just at the end.

LISTNUM 1 \l 15424             How do you know they are upscale?

LISTNUM 1 \l 15425             MR. GROSSMAN:  We would be looking at sort of the general trends of inheritance, the larger shift of wealth ever seen, where parents are handing over their estates and fortunes to their children.


LISTNUM 1 \l 15426             I think is just a generally ‑‑ general sense that there is more material wealth available to an older ‑‑ the yuppie generation that there ever has been.  I think we see that in the retail spends that are evident in Sudbury, as well as just common sense would prevail that there is money available, it is a more mature upscale audience than has been in the previous.

LISTNUM 1 \l 15427             COMMISSIONER CRAM:  I thought they gave all her money to their kids.

LISTNUM 1 \l 15428             MR. GROSSMAN:  They spend it first.

LISTNUM 1 \l 15429             COMMISSIONER CRAM:  Your core audience would be?

LISTNUM 1 \l 15430             MR. GROSSMAN:  It would be 55 to 64.

LISTNUM 1 \l 15431             COMMISSIONER CRAM:  Who is your ‑‑ is it a Jack or a Diane and what age are they?

LISTNUM 1 \l 15432             MR. GROSSMAN:  Paul, or Bill, do you want to dive into that?

LISTNUM 1 \l 15433             MR. BILL EVANOV:  It would be slightly skewed female, maybe 55‑45 or 53‑47 percent, just slightly, nothing major.

LISTNUM 1 \l 15434             The age demo really would be ‑‑ between 55 and 60 would be your predominant age group.

LISTNUM 1 \l 15435             Our core, like our heavy core, would be 55‑64, with the bulk of that, even the larger portion, being 55‑60, which is what we have experienced in Ottawa and also we have experienced that in Newmarket.

LISTNUM 1 \l 15436             COMMISSIONER CRAM:  All right.


LISTNUM 1 \l 15437             I thought it interesting at page 3 of your introduction today you are talking about:

"When we evaluated the market, we determined that the most popular demographic, the 18‑45 year olds, is well‑served by existing stations."

LISTNUM 1 \l 15438             You did your own evaluation of the market?

LISTNUM 1 \l 15439             Is that what I'm hearing?

LISTNUM 1 \l 15440             MR. GROSSMAN:  Yes, we did.  Yes.

LISTNUM 1 \l 15441             COMMISSIONER CRAM:  And you didn't really look at satisfaction levels, you looked at the fact of who the formats were directed at.

LISTNUM 1 \l 15442             Is that correct?

LISTNUM 1 \l 15443             MR. GROSSMAN:  That's correct.

LISTNUM 1 \l 15444             I will ask Sean to give you some background on the research that we did.

LISTNUM 1 \l 15445             MR. MOREMAN:  That is correct.

LISTNUM 1 \l 15446             What we did was looked at what services existed in the market and who they self‑identified as marketing to and we said that there was a hole ‑‑ in our opinion, there was a hole at the top end of the demographic.  We went in and did a satisfaction survey amongst the demographic that we ‑‑


LISTNUM 1 \l 15447             COMMISSIONER CRAM:  The demographic you were proposing to direct yourself at.?

LISTNUM 1 \l 15448             MR. MOREMAN:  That's correct.

LISTNUM 1 \l 15449             COMMISSIONER CRAM:  Yes, all right.

LISTNUM 1 \l 15450             So I find it interesting Newcap here is aiming at that very demographic, the younger demographic, and younger still, and we have always been told that it is that demographic that is leaving radio.

LISTNUM 1 \l 15451             Now, at the end of my career with the CRTC, I find out that there is another demographic leading, the 45‑plus.  Radio is in real trouble.

LISTNUM 1 \l 15452             You say you repatriated, can I say, the older listener, you think, in Ottawa and in Newmarket?

LISTNUM 1 \l 15453             MR. GROSSMAN:  The ratings from S106 for the four rating periods over the launch of The Jewel, there was 31 percent increase in tuning 55‑plus than there was before The Jewel was on the air.  That is evident in the BBM ratings in Ottawa.

LISTNUM 1 \l 15454             COMMISSIONER CRAM:  Oh, in the BBM ratings.  All right.


LISTNUM 1 \l 15455             MS LAURIGNANO:  If I can add to that, just to clarify about the research and the tuning and the trends, you are correct, there is a lot of research in the public domain, some of which we have advanced and other applicants in the past, that shows that the two ends of the demographic are leaving radio, are not tuning in radio, or they are not tuning as often.

LISTNUM 1 \l 15456             Luckily for Sudbury, there has been an increase in tuning overall for radio.  The research will bear that out.  That is specifically true in the age demo.

LISTNUM 1 \l 15457             So while the tuning is up overall, it is significantly lower in the higher end of the demographics, which is one of the things that we looked at and we analyzed about what format could possibly be feasible there.  That was just like an initial step, because had we gotten back some results that this format was not feasible we would have gone and found a format, fine, but it just happened that it confirmed all that.

LISTNUM 1 \l 15458             So it is true that that trend has been going on.

LISTNUM 1 \l 15459             In Sudbury it is a different situation right now and, as I say, luckily for us because, as you know, we are crusaders for the young demographics where we have actually come up with a YCR format that we are trying to advance across the country.  That tuning is way up in Sudbury, which is great.


LISTNUM 1 \l 15460             The other thing I think that supports our argument that the need is in the older demo, you will see by the number of applicants that four out of the six really have identified the top end of the market as having the greatest need.

LISTNUM 1 \l 15461             So I just wanted to add that in.

LISTNUM 1 \l 15462             COMMISSIONER CRAM:  Thank you.

LISTNUM 1 \l 15463             I take it, though, that because Ottawa and Newmarket you have more competition, or you would have more competition, in Sudbury you are going to add more newer music.

LISTNUM 1 \l 15464             Is that the concept?

LISTNUM 1 \l 15465             MR. BILL EVANOV:  It would be somewhat similar.  There might be ‑‑ well, there would be more newer music now that were getting into the emerging artist percentages that we are committing to.  In that respect there would be more newer music ‑‑ I'm having problems with the alliteration this morning, excuse me ‑‑ if that's the question your asking.

LISTNUM 1 \l 15466             COMMISSIONER CRAM:  Yes.


LISTNUM 1 \l 15467             MR. BILL EVANOV:  But other than that, the formats would be very, very similar in nature.  When you say "newer music" that doesn't mean you are putting on rock music and targeting younger, it just means you are putting in newer, more melodic, easy‑to‑listen‑to‑type music that the 45‑plus age demo might enjoy.

LISTNUM 1 \l 15468             COMMISSIONER CRAM:  You talked a fair bit about instrumental this morning and it seems you are looking at about 20, 25 percent of instrumental?

LISTNUM 1 \l 15469             MR. BILL EVANOV:  Yes, we are looking at 25 percent instrumental.

LISTNUM 1 \l 15470             COMMISSIONER CRAM:  How much would be Category 3?

LISTNUM 1 \l 15471             MR. BILL EVANOV:  Of the overall music or of the instrumental?

LISTNUM 1 \l 15472             COMMISSIONER CRAM:  Of the instrumental.

LISTNUM 1 \l 15473             MR. BILL EVANOV:  It would be around 3 percent.

LISTNUM 1 \l 15474             COMMISSIONER CRAM:  All right.  Three to 5, I think you said.

LISTNUM 1 \l 15475             MR. BILL EVANOV:  Three to 5 is the overall, yes.

LISTNUM 1 \l 15476             COMMISSIONER CRAM:  I noticed classics.  You were talking about a couple of classics that I was fascinated by.

LISTNUM 1 \l 15477             Are the instrumentals part of the programming or are they day‑parted?


LISTNUM 1 \l 15478             MR. BILL EVANOV:  Here is what you will hear in a day.

LISTNUM 1 \l 15479             In morning drive there might be limited instrumental because it is a morning drive program, it is very, very different, and there might be one an hour.  It depends on the programmer in that area.

LISTNUM 1 \l 15480             From 9 o'clock on there would be at least two per hour.  What we found is, two per hour mixed in with the other genres of music that we are doing from different eras fits in beautifully and there is a real nice mix to it.  We have experimented with this for a long time.

LISTNUM 1 \l 15481             So throughout the day you are going to hear perhaps 20 different instrumentals, okay, throughout your day‑part.

LISTNUM 1 \l 15482             Then, in the evening, we will come to a specialty program of instrumental music where I think we are playing about 39 selections, 38 selections, could be 40 depending on whatever.  That is more of a specialized program.  That is why we have that particular block.


LISTNUM 1 \l 15483             The other reason for it is that you can take 1,000 tracks of instrumental music and there is some you cannot play in the daytime.  They are perhaps very slow, they will bring your program to a halt.  So those are day‑parted to the evening time period and the ones that are perhaps a little bit more lively would be day‑parted to the earlier part of the day.

LISTNUM 1 \l 15484             I just want to go back very quickly.

LISTNUM 1 \l 15485             When we began this format years ago in Newmarket we didn't play any instrumental music, unless maybe it was a hit by a Herb Alpert or a Percy Faith or something that just came up once in awhile, "Summer Place" or whatever.

LISTNUM 1 \l 15486             Then we started to get phone calls from many, many people, okay, because we thought, like everybody else, instrumental music was dead.  Then we got the shock all of our lives, because phone calls and e‑mails would come in and say "Listen, you know, you may not play it, but there is a school here that has a class of 300 kids playing instrumental music, there is another school there that has a class of 40 kids playing instrumental music and there is a lot of people that play instrumental music so why don't you put it on the air?"  So we did.


LISTNUM 1 \l 15487             We started inviting people to send us their own home‑made, basement‑made CDs as well.  Then we started adding more and more, but we couldn't add ‑‑ then we had to make a decision and experiment with the programming where could we put it.  So in terms of day‑parting, we put some in the day, some in the evening, and a lot of people really wanted ‑‑ there was a real demand from a lot of people that really were interested only in instrumental music, so we created an evening block of a couple of hours specifically for them and anybody else to enjoy.

LISTNUM 1 \l 15488             If you are reading a book, if you have a nice evening to enjoy something, it is beautiful music to listen to.  So for that reason we have had a great response.

LISTNUM 1 \l 15489             We believe if there are stations across the country playing this music, instrumental music will come back.  But if radio doesn't take the lead and play it and give it the exposure, it is going to remain in the basements.

LISTNUM 1 \l 15490             But it will never go away.  It has been around since the days of Strauss and Beethoven.  It is not leaving, it is here to stay and we are going to play it.

LISTNUM 1 \l 15491             In terms of the classical, we are not a classical music station, but we will play some light classics.  You know, we will play the waltzes, we even play tangos, and it is mixed in with a lot of the pop classics.  So it has a very exciting sound to it.


LISTNUM 1 \l 15492             That is what I can tell you about that.

LISTNUM 1 \l 15493             COMMISSIONER CRAM:  Thank you.

LISTNUM 1 \l 15494             MR. BILL EVANOV:  Oh, Carmela?  Sorry.

LISTNUM 1 \l 15495             MS LAURIGNANO:  I just have something to add.

LISTNUM 1 \l 15496             The way that the programming is formatted is also supported by our research.  What the research found is that there is a core of people who really like instrumental music.  It is not surprising, because those of us who grew up and who lived prior to the '90s ‑‑ exactly ‑‑

LISTNUM 1 \l 15497             COMMISSIONER CRAM:  Playing the piano.

LISTNUM 1 \l 15498             MS LAURIGNANO:  ‑‑ if you look at charts, instrumental music used to chart as well as vocals.  I mean, it was part of every station's radio mix that, you know, you would have top 40 hits that were instrumental.


LISTNUM 1 \l 15499             So this music is very, very familiar to people.  They know it and it is like "Holy smokes, I haven't heard that in a while".  So it is both familiar in terms of having lived with it, it is familiar sometimes because it is cover versions of popular, familiar music.  So there is a hard core for that.  Those people are going to be extremely satisfied in those three hours of solid programming in the evening.

LISTNUM 1 \l 15500             What the research also found is that there are a number of people who said "Ah, I don't know about instrumental music.  It's not really my favourite thing".  But when we played them a sample ‑‑ which we did, we actually blended an instrumental music ‑‑ the numbers shot up like crazy about how likely they would be to listen they liked it so much when it was blended.

LISTNUM 1 \l 15501             So we have really taken those two, you know, findings and put them and translated them into the programming.  That is why it is blended in the day time, sometimes two or three an hour depending on the day parts and what kind of blend we are going to do to the solid stuff.

LISTNUM 1 \l 15502             We think, too, that during the daytime when people come to realize and appreciate those tunes and that kind of music and get to like it ‑‑ which we know they will ‑‑ then they will have the opportunity to get their real fill of it, which is later on, and we will promote it as such that they can go on the evening and listen to that particular block.

LISTNUM 1 \l 15503             COMMISSIONER CRAM:  Thank you.


LISTNUM 1 \l 15504             So how is this format going to be different from the format of Joco or Wrightsell?

LISTNUM 1 \l 15505             MR. BILL EVANOV:  If we look at Joco, we are trying to understand the format.  I'm not being critical, I don't understand it fully.  But from what we heard, it is an Oldies format which tells me that it is maybe a lot of rock and roll oldies, which we are not.  We are more ‑‑ we are a soft melodic ballad sound, romantic songs or wherever.

LISTNUM 1 \l 15506             They have made no major commitment of any kind to instrumental music.  They may play the odd one, but we will play 25 percent.

LISTNUM 1 \l 15507             For us it is a major source also of emerging artists.

LISTNUM 1 \l 15508             They don't believe in the internet.  We believe in the internet and we believe that older people like ourselves, or even people 10 years older than us, are using the internet.  What we have found, even in Ottawa, that we are getting e‑mails ‑‑ from Gatineau and Ottawa, e‑mails from people that are probably in their late 70s how much they enjoy the music, or their early 70s.


LISTNUM 1 \l 15509             We use it as a marketing tool.  Our programming is available there, information is available, contests are available, so we think it is an excellent tool for the radio station and it knows no age barriers.  I think if there is an interest people will learn it.  It can be very basic as e‑mails or just listen in online.

LISTNUM 1 \l 15510             I think their commitment to emerging artists was 10 percent and our commitment is 16 percent over the week.  In other words, we have 40 percent of the 40 percent Canadian, which works out to 16 percent.  So ours is higher there.

LISTNUM 1 \l 15511             I believe our CTD commitment is higher.

LISTNUM 1 \l 15512             COMMISSIONER CRAM:  I'm just talking about programming.

LISTNUM 1 \l 15513             MR. BILL EVANOV:  Yes, I'm sorry.

LISTNUM 1 \l 15514             COMMISSIONER CRAM:  So Mr. Wrightsell's proposal?

LISTNUM 1 \l 15515             MR. BILL EVANOV:  Yes.

LISTNUM 1 \l 15516             Their medium age is 42 or 43 which really sort of made me sit up and wonder if they were targeting the right group.  If they do, that is a greater impact in the market in the stations that are currently there.  Where ours is up into the mid to late 50s so our impact will be less in the market.


LISTNUM 1 \l 15517             I believe their emerging was 15 percent of the 40 which is 6 percent.  Again ours was 16.  I believe also that they had no real instrumental down on their list in terms of instrumentals where we have a firm commitment and we believe in that.

LISTNUM 1 \l 15518             Also, from what I gathered, there was no spoken word features that were defined, whereas we have 40 scheduled features per week.  This is not counting news.

LISTNUM 1 \l 15519             So I think we bring a proven format, a working model and a very large library to the table in terms of producing this type of music.

LISTNUM 1 \l 15520             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15521             Moving on to spoken word, what is the total amount of structured spoken word?

LISTNUM 1 \l 15522             MR. GROSSMAN:  Paul, I will ask you to answer.

LISTNUM 1 \l 15523             MR. PAUL EVANOV:  All right.  To break it down, along with ‑‑ you know, music is a huge part of this radio station, but obviously spoken word is obviously very important within that.  As the research indicated as well, there is a high interest in surveillance, weather, traffic, news and information.  So we have incorporated that in our entire program schedule.


LISTNUM 1 \l 15524             So with features and news, we have news and news updates, which Wendy can elaborate on, we have 189 minutes per week for news and news updates alone.  We also have traffic reports, which add up to about 176 minutes per week.  Our combined features, community calendar, business report, health watch and book of the week equals about 56 minutes per week.  We have the Canadian Spotlight specialty show which runs twice, which is two hours there.  Mixed within that as well, those features on their own, we also have announcer talk, rolling talk between the announcers.

LISTNUM 1 \l 15525             COMMISSIONER CRAM:  The question was:  How many hours of structured program spoken word?

LISTNUM 1 \l 15526             MR. PAUL EVANOV:  Structured excluding commercials, we have 995 minutes, 16.5 hours, which would equal up to 13 percent per week of spoken word.

LISTNUM 1 \l 15527             COMMISSIONER CRAM:  You are looking at something that I think has it all spread out very easily.

LISTNUM 1 \l 15528             Could you provide that to us so we could use it for comparison.

LISTNUM 1 \l 15529             MR. PAUL EVANOV:  I definitely could.  I will clean it up from my notes and submit it.

LISTNUM 1 \l 15530             COMMISSIONER CRAM:  That would be great.


LISTNUM 1 \l 15531             The unstructured spoken word, how much are you planning?

LISTNUM 1 \l 15532             MR. PAUL EVANOV:  Unstructured in regards to announcer talk?

LISTNUM 1 \l 15533             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 15534             MR. PAUL EVANOV:  Announcer talk on average, on average 8 to 10 minutes per hour.  Some hours we will have a little bit less.  Obviously there will be more emphasis in the morning show, a little bit less in the midday.  Some features such as the Canadian Spotlight, if we have a Canadian artist in or a few artists in there will be a little more talk in that hour.  Some weeks there might not be any artists, there will be a little bit less, but on average 8 to 10 minutes of announcer talk, which will include, you know, regular surveillance and information and updates.

LISTNUM 1 \l 15535             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15536             MR. PAUL EVANOV:  As well as information on artists and the music that we are playing.

LISTNUM 1 \l 15537             COMMISSIONER CRAM:  How many new staff are you planning on hiring?

LISTNUM 1 \l 15538             MR. PAUL EVANOV:  I will have Wendy address our news department.


LISTNUM 1 \l 15539             MS GRAY:  We plan to have one full‑time news anchor/news director who will either do the morning or the afternoon news shift.  We will have two part‑time employees in the newsroom, one again either doing the morning shift.  As well, those two will split the reporting duties within the city, and we plan on utilizing three to four interns from Laurentian University or Cambrian College to do some follow‑up on press releases as well as going out to press conferences, city council meetings, that sort of thing, to provide them an opportunity to learn in a working newsroom.

LISTNUM 1 \l 15540             COMMISSIONER CRAM:  When you say "part‑time" do you mean half time?

LISTNUM 1 \l 15541             MS GRAY:  Part time would be 25 to 30 hours.

LISTNUM 1 \l 15542             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15543             The number of programming staff?

LISTNUM 1 \l 15544             MS GRAY:  I'm going to let Paul speak to that.

LISTNUM 1 \l 15545             MR. PAUL EVANOV:  Sorry to jump around here.


LISTNUM 1 \l 15546             In total we have eight full‑time programming staff and three part‑time, which consists of obviously program director, as Wendy stated, our news staff there.  We also have ‑‑ we are live all day from 6:00 a.m. to midnight with the morning show, live morning show, live midday, live drive home and live evening show, along with two swing announcers as well to cover off some weekend shifts and to fill in where needed, and also a production and creative director for the station and the programming department, on top of the news department that Wendy just spoke to.

LISTNUM 1 \l 15547             COMMISSIONER CRAM:  So the eight programming and then, in addition, the news, the two essentially FTEs.

LISTNUM 1 \l 15548             You have answered my other question, you are going to be live‑to‑air during the full broadcast week?

LISTNUM 1 \l 15549             MR. PAUL EVANOV:  Yes, we are, from 6:00 a.m. to midnight and there will be a bit of voicetracking over night.

LISTNUM 1 \l 15550             COMMISSIONER CRAM:  Yes, midnight to 6:00 a.m., yes.

LISTNUM 1 \l 15551             MR. PAUL EVANOV:  Yes.

LISTNUM 1 \l 15552             COMMISSIONER CRAM:  You said in your letter of January 9, that there would be a minimum of 100 hours of local programming.

LISTNUM 1 \l 15553             Are you going to be moving some programming from your other stations or how is that going to work?


LISTNUM 1 \l 15554             MR. GROSSMAN:  I will ask Paul to talk to that.

LISTNUM 1 \l 15555             MR. PAUL EVANOV:  Yes.  Out of 126 minimum 100 will be local.  As again some of our features, the Canadian Spotlight, we will be gathering some ‑‑ we want to utilize the resources of our other radio stations so there will be some information coming from perhaps Newmarket or perhaps Ottawa in order to spotlight some of the Canadian artists in those cities or different areas.

LISTNUM 1 \l 15556             So those might be in some of the Canadian Spotlight which would perhaps count as local, but a minimum 100 hours would be local to the Sudbury ‑‑ you know, from the Sudbury radio station.

LISTNUM 1 \l 15557             COMMISSIONER CRAM:  So potentially 26 hours and that would be ‑‑ it sounds like primarily spoken word programming would come from elsewhere?

LISTNUM 1 \l 15558             MR. GROSSMAN:  Yes.  Like some of the feature programming.  If we could utilize the resources in the other stations, that would be included there.

LISTNUM 1 \l 15559             MR. BILL EVANOV:  I'm sorry, the 100 hours is minimum.

LISTNUM 1 \l 15560             COMMISSIONER CRAM:  Yes.


LISTNUM 1 \l 15561             MR. BILL EVANOV:  We just wanted some flexibility because we didn't know what we necessarily might produce.  It may end up that we might be 120 hours of live programming originating from Sudbury.  So we wanted a little bit of flexibility.  Seven years is a long time and things will come up, but definitely not John Tesh.

LISTNUM 1 \l 15562             COMMISSIONER CRAM:  Programming synergies then, there would be some programming synergies with your stations, Mr. Evanov.

LISTNUM 1 \l 15563             Would there be any programming synergies with any other of your Haliburton stations, Mr. Grossman?

LISTNUM 1 \l 15564             MR. GROSSMAN:  I think the predominance would be with Bill's stations in Newmarket and Ottawa.

LISTNUM 1 \l 15565             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15566             MR. GROSSMAN:  For programming, that is.

LISTNUM 1 \l 15567             COMMISSIONER CRAM:  Yes.  That's right.


LISTNUM 1 \l 15568             MR. BILL EVANOV:  In terms of music.  But each station will have its own music director, okay, who will decide on the actual final mix in terms of, for example, if Sudbury is an older market he may spin certain records a bit more than we would in Ottawa.  He would be in direct contact with local Canadian talent in that area that he may want to give airplay to.

LISTNUM 1 \l 15569             So although the library and the philosophy of the program is the same, it is the local music director that will have a hands‑on with that format.

LISTNUM 1 \l 15570             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15571             As you said, 16 percent overall to emerging artists.

LISTNUM 1 \l 15572             The definition is what I need to know.  How do you define "emerging artists"?

LISTNUM 1 \l 15573             MR. GROSSMAN:  Carmela, do you want to tackle that?

LISTNUM 1 \l 15574             MS LAURIGNANO:  I think so.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15575             MS LAURIGNANO:  We have defined "emerging artists" as artists who have not sold 50,000 units or have not been certified.  Artists who have not made it to any of the recognized charts such as top 40 or BDS or Mediabase, or artists who have made those charts but have been on it for less than a year.

LISTNUM 1 \l 15576             COMMISSIONER CRAM:  Help me, is that different from the CAB?


LISTNUM 1 \l 15577             MS LAURIGNANO:  It is very much similar to the CAB.  I'm not sure if it's exactly the same, but it is similar to the CAB.

LISTNUM 1 \l 15578             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15579             You had that, I think, in one of your letters, your definition.

LISTNUM 1 \l 15580             MS LAURIGNANO:  Yes, we do.  That is in our ‑‑

LISTNUM 1 \l 15581             COMMISSIONER CRAM:  I have it, your letter of January 9th.

LISTNUM 1 \l 15582             MS LAURIGNANO:  January 9th, right.  The second one.

LISTNUM 1 \l 15583             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 15584             In your revenue you project getting 25 percent from existing radios.  How did you ascertain that?

LISTNUM 1 \l 15585             MR. GROSSMAN:  It is a combination of looking at the BBM ratings, our experience in the northern markets, Bill's experience in Ottawa and in Newmarket and sort of looking at the mix.  We have feet on the street in Sudbury and get a sense of what really can practically happen in that market.  So we are pretty confident based on their experience and our experience that that is accurate.

LISTNUM 1 \l 15586             COMMISSIONER CRAM:  You are also optimistic about your growth.  You have 7.5 percent, 7, 5, 5, 4, 4.


LISTNUM 1 \l 15587             MR. GROSSMAN:  I will ask Carmela to speak to that issue.

LISTNUM 1 \l 15588             MS LAURIGNANO:  Yes, we are very confident.  In fact, we are the one applicant who has the best projections in terms of revenues over the seven years.

LISTNUM 1 \l 15589             It is something that comes from a formula that we are familiar with.  It is not just based on BBM numbers and expecting a share of the market to be translated into revenue, because we traditionally do better.  We outperform those shares.

LISTNUM 1 \l 15590             Also, we are looking for this market at a source of advertisers who are not traditional advertisers for the most part, some who have been wanting this market but who have been unable to reach it because of inefficiencies in the buy.


LISTNUM 1 \l 15591             I mean, if you are looking at the Sudbury market right now to reach the 50‑plus, you have to buy an AM station where the programming is a bit of a hybrid thing and the actual audience is not that great for that radio station, or you have to buy Easy Rock which attracts a certain percentage of those people 50‑plus, but you have to pay the rate to reach the whole universe.  So it is not very economical for an advertiser who wants to reach his market to have to buy 1,000 listeners to reach 500 car buyers.

LISTNUM 1 \l 15592             You know, it's the old thing, if you are an advertiser would you rather buy a station that has a million listeners, or would you rather buy a station that has 500 car buyers.  Well, I mean the answer is the 500 car buyers and the analogy here is the same.

LISTNUM 1 \l 15593             So there is a very large number of advertisers who want to reach this market, who have been spending money by the way, but it is not to radio.  I mean there are billboards, there are bus boards, there is internet, there is print.  As we know, there are huge amounts going to print and to, you know, standing at the street corner and signs and all kinds of other efforts, and our experience, you know, radio is cost‑effective and it is broadcasting so you reach a large number of people.


LISTNUM 1 \l 15594             So we are very, very confident and we have, I think, the experience and the record that we can do that.  Part of this whole thing about putting the business plan together was that we did speak with advertisers, and not just in this market but, as you know now, we did it in Ottawa and we did it in Kamloops and we did it in, you know, Calgary.  While the geography is different, you know, the desirability of the group and the lifestyle and demographic and that appeal is pretty much across the country.

LISTNUM 1 \l 15595             So we know that we can bring new revenue to broadcasting and I think that is one of the great benefits that we can bring to the system with the licensing of this station.

LISTNUM 1 \l 15596             MR. BILL EVANOV:  May I add one thing?

LISTNUM 1 \l 15597             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 15598             MR. BILL EVANOV:  It is just based on the experience of our Newmarket station.

LISTNUM 1 \l 15599             That is probably one of the toughest radio stations to sell and that is why for the 14 years before we bought it it lost big money each and every year, because it has a signal that is confined and it is in the middle of the Toronto CMA and it is very hard to sell.

LISTNUM 1 \l 15600             But today 70 percent of the advertisers on that station are brand new to radio.  In other words, they were taken from elsewhere and brought to radio.  Seventy percent.  That is a very high percentage.


LISTNUM 1 \l 15601             The station was forced to do that because they went after the regular advertisers and couldn't get them because they didn't have the numbers or the signal, so I said "Okay, let's go after everybody on the street and let's find out.  Let's bring people to radio".  And that's what it did.  I took people away from print, I took some billboard people away and I took some people that just didn't believe in advertising and brought them to radio.  But 70 percent of the clients on that radio station are new to the broadcast business ‑‑ radio.

LISTNUM 1 \l 15602             COMMISSIONER CRAM:  Mr. Grossman, moving on, because you are in the market, what would you say the impact of the ending of the LSA is?

LISTNUM 1 \l 15603             MR. GROSSMAN:  I talk from personal experience in Timmins where we were fortunate enough to be in an LSA and what we have seen in that market is that since it has split up there is a dramatic increase in our sales in Timmins with basically flat rating.

LISTNUM 1 \l 15604             To answer your question about Sudbury, I think when you have more people in the field asking for business you are going to get more business.  The reality is, I think that Newcap has to have more people in the field than they did in the past and I think it is going to have a positive impact for the market.


LISTNUM 1 \l 15605             COMMISSIONER CRAM:  Mr. Grossman I want to talk to you about your strategy.

LISTNUM 1 \l 15606             MR. GROSSMAN:  All right.

LISTNUM 1 \l 15607             COMMISSIONER CRAM:  You said today at page 2 that:

"Our French station in Sudbury is really the driving force behind the remainder of the Haliburton French cluster.  The synergies offered ..."

LISTNUM 1 \l 15608             Again, at the end you talked about

"... Haliburton will be able to strengthen its French network."

LISTNUM 1 \l 15609             But you had a station in the market in 1999.

LISTNUM 1 \l 15610             MR. GROSSMAN:  Right.

LISTNUM 1 \l 15611             You know, I can only suggest to you that, you know, I think we are the largest small‑market Northern Ontario broadcaster and it was probably one of the most difficult decisions I had to make.  It's all on the public record.  The money that we got from the station was reinvested and then millions more in more stations in Northern Ontario.

LISTNUM 1 \l 15612             If I could do it again, I would never have sold that station.  It was probably one of the biggest tactical mistakes I have made.


LISTNUM 1 \l 15613             But I think that what it taught me was what it is going to take for you licensing a station in Sudbury right now.

LISTNUM 1 \l 15614             The reality is, we need to get back in there.  It is crucial to the Northern stations that we have.  The reality is that, you know, we have launched a station in North Bay up against Rogers.  I know what it takes to be successful in that market where we have had some great success competing with them.

LISTNUM 1 \l 15615             You know, I ask you to consider what I feel from my heart is that I wish I could have gone back ‑‑ and Bob Templeton was very convincing, and I wish I had talked to Gary Slaight a month before I talked to Bob Templeton.  In hindsight it was a major error that I want to undo.

LISTNUM 1 \l 15616             I want you to give me a licence in Sudbury again because, I tell you, we will compete effectively against Rogers and I believe our application is stronger with Bill, and you see the passion and what they talk about with the format, it is a marriage made in heaven.  Two strong independents that really, really can compete effectively.  I think we are the only ones that can really go up against Rogers effectively, and I'm sure Newcap as well.


LISTNUM 1 \l 15617             COMMISSIONER CRAM:  So your tactical error was ‑‑

LISTNUM 1 \l 15618             MR. GROSSMAN:  Selling it.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15619             COMMISSIONER CRAM:  Yes.  Was it because you were ‑‑

LISTNUM 1 \l 15620             MR. GROSSMAN:  We at the time, I'm sure ‑‑ and again it's on public record ‑‑ we bought five AM stations from ‑‑ we are in the business of buying distressed properties, stations that are under performing in Northern Ontario and made quite a good business of it, but at the time we went to Pierre Morrisette and I bought five AM stations and converted four of them in a row.  I wish I had reversed the order and done Sudbury first, but we had tower issues in Sudbury.  We had a difficult time getting an agreement with Telemedia at the time to use the combiner there.


LISTNUM 1 \l 15621             We were basically put in a jam where I had to make a decision where we had a cottage country station in Perry Sound that was in the market for sale and we had to consolidate our strength in the cottage markets in Muskoka for the Toronto market.  It is the core of our business and I just couldn't let that opportunity go at the time.  I fully disclosed it to the Commission and I can't impress upon you enough, we have to get back into Sudbury.  I wish I had never sold the station in the first place.

LISTNUM 1 \l 15622             COMMISSIONER CRAM:  Yes.  You are still continuing your business of buying distressed radios?

LISTNUM 1 \l 15623             MR. GROSSMAN:  Right.  As you know, we have a couple before the Commission right now of stations that are in distress and, you know, we make a business out of it.  We can go in and rationalize the business, use the synergies that we have in our company, and we feel very confident that there is a good, solid future in Northern Ontario and, now that Standard is for sale, we are going to be able to expand that to Southern Ontario.

LISTNUM 1 \l 15624             COMMISSIONER CRAM:  Yes.  I look at your map and in terms of English licences Sudbury would be at the end, so strategically if you had to let it go again you could, probably.  Right?

LISTNUM 1 \l 15625             MR. GROSSMAN:  No, it's not.  Again it talks to the issues that Paul was talking about.  It is the regional centre for the North.


LISTNUM 1 \l 15626             If you go to Berrydown and look up the hill, they have Cosco there.  Our customers, our advertisers, our listeners in Elliot Lake, Iroquois Falls, Cochrane, Timmins, Kapuskasing, Hearst go and shop in Sudbury.  It is the regional health centre for people in those areas.  If you have cancer, you have to go to Sudbury to get treated.

LISTNUM 1 \l 15627             The reality is it's the centre.  That's why retail sales are up.  You talked about the disposable income being down, retail sales are up.  It's because people are migrating to shop in those markets because of the choices that they had that they have built in Berrydown, which is a regional.  You have large retailers doing lots of volume in the market.

LISTNUM 1 \l 15628             COMMISSIONER CRAM:  All right.  Thank You.  Thank you very much, gentlemen.

LISTNUM 1 \l 15629             MR. BILL EVANOV:  Can I add something, because we are part of the applicant.

LISTNUM 1 \l 15630             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 15631             MR. BILL EVANOV:  We are in this for the long haul.  The Evanov Radio Group has never sold a radio station.  We have competed against the biggest odds in Toronto.  When we were a CHR we had to take on Rogers plus three Corus stations that came right at us with the identical format.  We stood our ground.  We were the weak sister, the independent but we prevailed.  They ended up flipping formats and changing.


LISTNUM 1 \l 15632             We are in Sudbury forever.  In other words, if we are lucky enough to get this licence we are there.  I know Mr. Grossman is committed.  His commitment goes even beyond our commitment in terms of that this station will support the French network, because without this station that is very tenable.  There are not big profits there and I'm sure the Commission knows that.

LISTNUM 1 \l 15633             But basically our stations together there are a powerful base for that French network, as well as operating ourselves.  But we have no intention of selling Sudbury no matter what.

LISTNUM 1 \l 15634             COMMISSIONER CRAM:  I believe you, Mr. Evanov.  There is always the possibility of a share transfer though, isn't there.

LISTNUM 1 \l 15635             MR. GROSSMAN:  I want to just add to that and I don't want to belabour it.

LISTNUM 1 \l 15636             COMMISSIONER CRAM:  Yes...?

LISTNUM 1 \l 15637             MR. GROSSMAN:  But the reality is, when I thought about doing this, you know, I looked at some of the other decisions.  When the Calgary decision came down I was ecstatic that somebody that sold a station could get back into it again.  I realized in my own sense that I had to get back in there.  I had to find a partner that, you know, could make this argument strong.  I had to make sure that we had the financial resources, which we do finally, to compete.


LISTNUM 1 \l 15638             And I know what it takes.  I am the only applicant here today that has competed with Rogers on a one‑on‑one level as a Northern Ontario operator, not just one station or two.  I know what it takes, both to compete with them in ratings and BBM, and our share in North Bay is a slam dunk.

LISTNUM 1 \l 15639             But they are fierce competitors, believe me.  Strong, you know, very strong competitors.  I say that with the utmost respect.

LISTNUM 1 \l 15640             COMMISSIONER CRAM:  Thank you.

LISTNUM 1 \l 15641             Madam Chair...?

LISTNUM 1 \l 15642             THE CHAIRPERSON:  Vice Chairman Arpin.

LISTNUM 1 \l 15643             COMMISSIONER ARPIN:  Thank you, Madam Chair.

LISTNUM 1 \l 15644             I only have one question and it is the same one that I have asked everyone that has appeared before us today and yesterday.

LISTNUM 1 \l 15645             How many stations do you think the Sudbury market could support, taking for granted you are one of them?


LISTNUM 1 \l 15646             Also, which of the applicants should we not be licensing because it will have a negative impact on your business plan and which one do you think is not competing really for the same demographic ‑‑ or is not in the same market that you are planning to go?

LISTNUM 1 \l 15647             MR. GROSSMAN:  I think that we would one licence to be granted and that would be us.  If you did grant a second licence, we would hope that it is demographically as far away from us as possible.

LISTNUM 1 \l 15648             COMMISSIONER ARPIN:  Thank you very much.

LISTNUM 1 \l 15649             Madam Chair...?

LISTNUM 1 \l 15650             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15651             Commissioner del Val...?

LISTNUM 1 \l 15652             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15653             Just one question for clarification.

LISTNUM 1 \l 15654             Your "After Nine" program, is that all instrumental or ‑‑

LISTNUM 1 \l 15655             MR. BILL EVANOV:  It is instrumental with talk, but there are no vocals.

LISTNUM 1 \l 15656             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 15657             Thank you, Madam Chair.

LISTNUM 1 \l 15658             THE CHAIRPERSON:  Legal counsel...?

LISTNUM 1 \l 15659             MS DIONNE:  Hello.

LISTNUM 1 \l 15660             MR. BILL EVANOV:  Could I just make a reference to one of the handouts we gave you?


LISTNUM 1 \l 15661             I think we gave you a handout that said "Canadian Artists Not Heard in Sudbury", and another one "World Class Artists Not Played in Sudbury".  There are a few at the bottom that are asterisk and we didn't quite explain the asterisked and we didn't quite explain the asterisk and I would like to explain that to you now, just very quickly.

LISTNUM 1 \l 15662             We looked at a month and those asterisks would indicate, for example, that perhaps that one artist had one song played.

LISTNUM 1 \l 15663             The example I'm going to give you is Bette Midler.  The station in town played probably her biggest hit, which was "Wind Beneath My Wings".  They played it one time, okay.  We play 10 Bette Midler songs.

LISTNUM 1 \l 15664             If you take Barry Manilow, they played one Barry Manilow; we play 39 Barry Manilow songs, different songs.

LISTNUM 1 \l 15665             It's the same thing with K.D. Lang, we play 13 songs, they play "Constant Craving".

LISTNUM 1 \l 15666             I guess we go deeper into the repertoire of each artist to play in more of their selections.  So even though they are on there, we asterisked them because there was one song that was played, that's all.  We didn't want to hide that, so that's why does our asterisked.

LISTNUM 1 \l 15667             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15668             Legal counsel...?


LISTNUM 1 \l 15669             COMMISSIONER ARPIN:  Now that you are drawing our attention to your two charts, I want only for the record to say that I'm not related to John Arpin at least.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15670             COMMISSIONER ARPIN:  I know that he is a pianist because I have a few records from him.  I have bought them only because it was carrying my name, but they are good.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15671             COMMISSIONER ARPIN:  I have one where he plays Scott Joplin music.  So he is not related.  I never met him.  I don't know who he is.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 15672             MR. BILL EVANOV:  We should invite you to Penetanguishene, because that is where he is from.

LISTNUM 1 \l 15673             MS GREY:  It's his loss, by the way.

LISTNUM 1 \l 15674             COMMISSIONER ARPIN:  It's his loss.

LISTNUM 1 \l 15675             MS LAURIGNANO:  It's actually his stage name.

LISTNUM 1 \l 15676             MR. BILL EVANOV:  And you do look a lot younger than him, too.

‑‑‑ Laughter / Rires


LISTNUM 1 \l 15677             MS DIONNE:  I would like to get your comments on the possibility of the Commission imposing a condition of your licence requiring at least 20 percent of your weekly music broadcast to instrumental music.

LISTNUM 1 \l 15678             MR. BILL EVANOV:  Could you repeat that?  I just didn't hear it.

LISTNUM 1 \l 15679             MS LAURIGNANO:  At least 20 percent instrumental music for the week.

LISTNUM 1 \l 15680             MR. BILL EVANOV:  At least 20 percent instrumental, yes.

LISTNUM 1 \l 15681             MS DIONNE:  Yes.  So you would agree with ‑‑

LISTNUM 1 \l 15682             MR. PAUL EVANOV:  Yes, we would.

LISTNUM 1 \l 15683             MS DIONNE:  You have agreed to provide a schedule break down of structured spoken word programming.

LISTNUM 1 \l 15684             Do you have it with you today?

LISTNUM 1 \l 15685             MR. PAUL EVANOV:  Yes, we do.  It has a few notes.  We will have it to you just after the lunch break, if that's okay.

LISTNUM 1 \l 15686             MS DIONNE:  Thank you.

LISTNUM 1 \l 15687             In your Supplementary Brief, page 9, you state that:


"Few stations in Sudbury broadcast current music suited to the new Easy listening format."

LISTNUM 1 \l 15688             You go on to say that you:

"...see this opportunity to fill this void by providing a broader range of current and new music in Sudbury than is offered by either of your stations in Newmarket and Ottawa."  (As read)

LISTNUM 1 \l 15689             Could you describe any other differences in terms of music between your Newmarket and Ottawa Stations and your proposed Sudbury Station.

LISTNUM 1 \l 15690             MR. BILL EVANOV:  The main difference would be Canadian musicians are artists that are very local to the Sudbury area because, as I mentioned before, Sudbury would have its own music director who would be very specific in terms of some of the rotation in terms of playing to perhaps a little bit of an older demo and in terms of putting music into the system that would be very local.  That is perhaps the main difference.


LISTNUM 1 \l 15691             MS LAURIGNANO:  That coupled with the commitment to the new and emerging artists.  Whereas we haven't really kept track of that in the other markets up until now, the commitment is there that we would meet the minimum requirements for the new and emerging artists for that market as a condition of licence or as a promise that we make here today.

LISTNUM 1 \l 15692             MS DIONNE:  All right.

LISTNUM 1 \l 15693             I have some questions regarding your Catalogue of Canadian Instrumental Music initiatives.

LISTNUM 1 \l 15694             Would there be an interactive components such as an ability to download copies of the instrumental music listed, or would the site's format be a basic catalogue style listing of titles, composers and contact information.

LISTNUM 1 \l 15695             MS LAURIGNANO:  Totally interactive.  Download, upload, post, hyperlinks, music sales, dialogue, artist contact, management contact, appearance schedules, performance.

LISTNUM 1 \l 15696             MS DIONNE:  All right.


LISTNUM 1 \l 15697             MS LAURIGNANO:  Really everything that would help an artist from where to get recorded, you know, hints and help about how to get a demo together, how to get in the programming department at the radio station, who the contacts are to, you know, advise to chats once in awhile to having actual online forum with artists, with programmers, with recording industry promoters, managers, that kind of thing.  So very much interactive.

LISTNUM 1 \l 15698             MS DIONNE:  All right.

LISTNUM 1 \l 15699             Would you explain to us why on top of the nine thousand and ‑‑ nine twenty thousand already approved to support this initiative through approval of your Ottawa application, why an additional about $91,000 per year is needed to get the initiative up and running?

LISTNUM 1 \l 15700             MS LAURIGNANO:  Yes, I can explain that.  The monies that are committed here would be earmarked specifically for the Sudbury and Northern Ontario region.

LISTNUM 1 \l 15701             MS DIONNE:  Okay.

LISTNUM 1 \l 15702             MS LAURIGNANO:  The monies would be directed towards adding for example to the database, that is by identifying artists, their selections, and in terms of marketing and making the catalogue a resource for artists, broadcasters and the public of Northern Ontario.  So there would be a specific effort there.


LISTNUM 1 \l 15703             For example, one of the things that we will do is, as part of the music and film in motion there is a Northern Ontario Music Development Program that was launched in 2005 and whose purpose and scope is to further assist Northern Ontario music artists and businesses.  The program provides assistance in all career stages for artists such as emerging, mid‑career and established and in the form of support.

LISTNUM 1 \l 15704             MS DIONNE:  Yes.

LISTNUM 1 \l 15705             MS LAURIGNANO:  So we would be dedicating part of that money through our third party to be really digging deeper in that specific area in terms of us going out to find them.  Whereas the catalogue is a resource that we promote and available for them to find us, we also, where we can, go find them, you know, those basements and cottages that Bill talked about, being aware that if we can facilitate the traffic over the bridge then, you know, both parties will benefit.

LISTNUM 1 \l 15706             MS DIONNE:  As you know, approval of the catalogue initiative as part of the Ottawa application was based in part on the evaluation of whether or not the overall benefit to the Canadian broadcasting system was commensurate with $920,000 earmarked to support this initiative.

LISTNUM 1 \l 15707             With the additional $91,000 proposed funding, the total commitment to this catalogue will total $1,011,000.


LISTNUM 1 \l 15708             Would you explain to us why you feel spending over $1 million to create the catalogue will provide a commensurate benefit to the Canadian broadcasting system?

LISTNUM 1 \l 15709             MS LAURIGNANO:  Yes.  It is a benefit because it is going to be something that is going to be in the public domain and it is going to be there forever and it is a resource that is, again, for the benefit of absolutely the broadcasting system, but it is also the broadcasting system providing something to the outside world.  That is, as I mentioned, to the film industry, who may be looking for composers and artists; to orchestras and artists who may be wanting to put a band together who are looking for musicians; to programmers who we wish and we hope may want to add instrumental music to their formats or to their music selections but don't know where to go; to schools.  Just the list goes on and on and on and on.

LISTNUM 1 \l 15710             So the benefit is for the system in the long run.


LISTNUM 1 \l 15711             Of course it is for the benefit of the artists, new and emerging artists, both in terms of helping them establish a career or start a career and in terms of getting that airplay that is so vital and important once it has been recorded that will hopefully put them into the next stage, which is to get them performance schedules and appearances and then sell records and get them airplay.

LISTNUM 1 \l 15712             MS DIONNE:  I have two last questions.

LISTNUM 1 \l 15713             Under the new CCD initiative Eligibility Guidelines that came out in the December Commercial Radio Review, it is possible that this catalogue initiative may no longer qualify as an eligible CCD initiative, this is because it would not obviously result in the production of audio content.

LISTNUM 1 \l 15714             If deemed ineligible, would you be prepared to redirect the proposed annual funding to another eligible CCD initiative or reduce your overall amount over and above CCD contribution by the ineligible amount?

LISTNUM 1 \l 15715             MS LAURIGNANO:  Right.  We would definitely not reduce our commitment.  We would redirect that amount.


LISTNUM 1 \l 15716             Also, you can expect us to keep fighting for it because we think is a very important initiative and it is also something that is an ongoing initiative with the CAEB, which is the Canadian Association for Ethnic Broadcasters, that we intend to put our comments forth for consideration.  In some terms it may be evaluated or valued in the same sort of terms.

LISTNUM 1 \l 15717             In any case, the commitment will not be any less and we would be unhappy to redirect it, but definitely we will ‑‑

LISTNUM 1 \l 15718             MS DIONNE:  This leads to my next question.

LISTNUM 1 \l 15719             How would the catalogue initiative, as it now stands, be impacted if, due to the reasons of possible CCD ineligibility or non‑approval of your Sudbury application, the $91,000 earmarked to support this initiative is no longer available?

LISTNUM 1 \l 15720             MS LAURIGNANO:  In the overall scheme of things it would not be impacted, because what we anticipated would be delivered with our initial investment was to create this national resource and to create it with the amount of money and over the seven years.  So that will not be impacted at all in any way whatsoever.

LISTNUM 1 \l 15721             As I mentioned, it would be additional funds, not just here, but that we would be looking for in other opportunities in the future and not just from broadcasters but even third parties and other sponsors or associates or strategic partners, because we all know the more you have the better you can do, that's all.


LISTNUM 1 \l 15722             But the overall impact and promise of that particular project would not be affected.  This would be additional things and would be specific to the Northern Ontario region.

LISTNUM 1 \l 15723             But I must say also that with the granting of this licence there would be a benefit extended to the catalogue as is right now regardless of whether the commitment is acceptable or not, because it would be another station for us to promote on, to put a hyperlink on, to promote some of our other initiatives that go along with catalogue.

LISTNUM 1 \l 15724             MS DIONNE:  These are my questions.

LISTNUM 1 \l 15725             Thank you, Madam Chair.

LISTNUM 1 \l 15726             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15727             Mr. Grossman, you now have your two minutes to summarize your application.

LISTNUM 1 \l 15728             MR. GROSSMAN:  All right.  We are going to have a combo team here.

LISTNUM 1 \l 15729             MR. BILL EVANOV:  Madam Chair, Commissioners, we want to emphasize a few of the most significant points in our application for the Diamond in Sudbury.


LISTNUM 1 \l 15730             We promise a new format to serve the 45‑plus demo with music not heard in the market, and we offer an entirely new independent voice.  Of all the applicants before you, we offer what we believe is the least amount of duplication with existing stations in terms of music.

LISTNUM 1 \l 15731             We will bring hundreds of Canadian artists to Sudbury radio and we have promised 40 percent Canadian content throughout our schedule.

LISTNUM 1 \l 15732             We will also bring to Sudbury instrumental music as a major part of our playlist.  There is a real interest expressed by the people of Sudbury for the format we have proposed.  A new easy listening with our particular mix of Instrumental, Pop Classics, Soft AC, melodic music with a touch of Category 3.

LISTNUM 1 \l 15733             Our two companies each bring specific strengths.  We never hesitate to look for the opportunity to serve those who are left out by the Canadian radio industry.  My company has a proven track record in establishing the new Easy Listening format and in surviving in the toughest and most competitive markets in Canada, big and small.


LISTNUM 1 \l 15734             MR. GROSSMAN:  My company, Haliburton, has particular experience in servicing communities throughout Northern Ontario in operating vital news and information services throughout the region and attracting advertisers.  The community spread through out this vast part of the province turned to our service for a vital link to the whole region.

LISTNUM 1 \l 15735             I want to remain independent and I am totally ‑‑ and I want to reassure you ‑‑ committed to Northern Ontario.  This form of merger of our two companies, the Diamond, is a positive form of consolidation, independent companies who remain independent of each other but share the strengths that can be best applied to the benefits of an under served community.

LISTNUM 1 \l 15736             If you grant the Diamond, we will tell you with confidence that the Haliburton group of French language stations in Sudbury, Kapuskasing, Hearst, Timmins and the independent operator in Chapleau, these stations rely on a strong base in Sudbury.  Licensing any other application and not the Diamond will severely harm the French cluster.

LISTNUM 1 \l 15737             Our proposal is distinct from the other applicants in that we aim to serve the oldest demo.  We ask you to help us serve this growing older demo in the Sudbury community and the instrumental artists who would like to be given the opportunity to perform for the people of Sudbury.

LISTNUM 1 \l 15738             Please license the Diamond.


LISTNUM 1 \l 15739             THE CHAIRPERSON:  Mr. Grossman, Mr. Evanov, and to your colleagues, thank you very much.

LISTNUM 1 \l 15740             Madam Secretary...?

LISTNUM 1 \l 15741             THE SECRETARY:  We have now reached Phase II in which applicants appear in the same order to intervene on competing applications, if they wish.

LISTNUM 1 \l 15742             Joco communication, Newcap, Connelly Communications Corporation, Larche Communications and the Haliburton Broadcasting Group have indicated that they will not appear in Phase II.

LISTNUM 1 \l 15743             Therefore, I would ask William Wrightsell to intervene on the competing applications.

‑‑‑ Pause

LISTNUM 1 \l 15744             THE SECRETARY:  William Wrightsell just mentioned to us that they will not be appearing in Phase II.

LISTNUM 1 \l 15745             THE SECRETARY:  We will now proceed to Phase III, in which other parties appear in the same order set out in the Agenda to present their intervention.


LISTNUM 1 \l 15746             Please note for the record that the intervenors Wabano Aboriginal Health Access Centre, Kassandra Cutting, and CIRPA listed in the Agenda have informed us that they will not be appearing at the hearing.

LISTNUM 1 \l 15747             I would now ask Music and Film in Motion to appear and present its intervention.

‑‑‑ Pause

LISTNUM 1 \l 15748             THE CHAIRPERSON:  I'm sorry, could you just please wait a second before you start.

LISTNUM 1 \l 15749             Thank you.

‑‑‑ Pause

LISTNUM 1 \l 15750             THE SECRETARY:  Please introduce yourself for the record and you have 10 minutes to make your presentation.

INTERVENTION

LISTNUM 1 \l 15751             MR. LANDRY:  Thank you very much.

LISTNUM 1 \l 15752             Madam Chair, Members of the Commission, good day and thank you for granting our organization the opportunity to present our views in the call for applications to operate an English‑language FM commercial radio undertaking in Sudbury.

LISTNUM 1 \l 15753             My name is Dennis Landry and I am the Executive Director of Music and Film in Motion, Musique et film en mouvement, a nonprofit bilingual organization with a mandate to foster the development and promotion of the music and film industries in Northern Ontario.


LISTNUM 1 \l 15754             Music and Film in Motion is also the official Northern Ontario affiliate for FACTOR.  We are a member of the FACTOR National Advisory Board and a member of a coalition of nine provincial and territorial music industry associations representing the regional interests of the music industry in Canada outside of Québec.

LISTNUM 1 \l 15755             We are very excited to be here to talk to go to our organization and how we believe that Newcap's application for a new commercial radio undertaking in Sudbury could positively impact on the music industry in Sudbury and Northern Ontario.

LISTNUM 1 \l 15756             We would like to deal with two aspects of the application today.  Those would be championing local music and a proposed financial investment in our organization.

LISTNUM 1 \l 15757             First, I would like to touch on access to the airwaves for local talent and championing local music.


LISTNUM 1 \l 15758             The single hardest task that any independent music artist will undertake in building their long‑term career is building an audience that can sustain it over the long term.  While technology is changing for the better and more support systems exist, to assist in this process commercial radio remains the undiscovered country for most independent music artists, one which can have a dramatically positive affect on their careers.

LISTNUM 1 \l 15759             Newcap has made commitments in its application that will help to address the lack of access as it currently exists in our market for local musical talent.  These commitments include:  championing local music innovation by broadcasting new songs and acts and acting as a platform for Sudbury's independent music sector and giving new unsigned bands airtime for interviews and demos.

LISTNUM 1 \l 15760             These commitments are refreshingly new among commercial radio undertakings in our community.  Providing this access will be of benefit both to the music industry by providing it with in a significant outlet to develop and communicate with a potential audience, and to listeners by offering fresh and new content unavailable elsewhere.

LISTNUM 1 \l 15761             Second, I would like to touch on the proposed financial investment in MFM's programs and services.


LISTNUM 1 \l 15762             Our organization offers the music industry in our region a wide variety of programs and services that provide support, information, communication, training and education, and we also offer business and market development services.

LISTNUM 1 \l 15763             All of these programs stem from our mandate, which is geared specifically towards supporting, promoting, educating and training the development of musical talent in Northern Ontario.

LISTNUM 1 \l 15764             We have created a three‑pillar structure around which our programs and services have been developed.  These include industry and development, which includes our industry database of resources, musicians, funding agencies, et cetera, that are there to support musical talent in Northern Ontario, get their products created and out to market; professional development and skills development activities; industry support; outreach advocacy and member services.

LISTNUM 1 \l 15765             We also offer a program in marketing Northern Ontario.  This includes direct marketing and outreach activities at the provincial and national levels, as well as our annual printed resource guide and directory which again takes the information from our industry database and puts it in a more compact form that is then easily distributable among our local artists, as well as promotion of Northern Ontario talent.


LISTNUM 1 \l 15766             Finally, our last program is the Northern Ontario Music and Film Awards, which includes an awards ceremony and a proposed grassroots industry conference and talent showcase.  The idea behind this program is clearly to shed the spotlight on artists in our community that many people simply don't know exist.

LISTNUM 1 \l 15767             At a fundamental level this investment would allow MFM to expand a number of these existing programs and services to respond to the growing needs of our membership and our industry.  Over the years in strategic and long‑term planning our services and programs have grown to meet the needs of our industry but, like many nonprofit organizations, we have never been in a financial position to implement every service or program to its fullest scope.  In truth, we must make do with what we have.

LISTNUM 1 \l 15768             As such, many of our programs and services were created with the capacity to be implemented in stages as funds became available, offering immediate support to our industry in those areas that were most demanding.  We have been fortunate in the support that we have received to date and what we have been able to accomplish in six short years with those resources.


LISTNUM 1 \l 15769             The proposed investment could not happen at a better time for our organization.  The initiatives that have been outlined in Newcap's proposal represent core programs and services, each with the capacity to expand and provide a wider base of support and development opportunities to our industry.  All that is required to kick‑start this expansion is a financial investment.

LISTNUM 1 \l 15770             Newcap's proposed contribution, coupled with our current organizational capacity, means that MFM would not require an administrative charge against any dollars coming from the investment.  We have a highly competent administrative infrastructure that is at the heart of our ability to do more with less, something that we have become increasingly skilled at.

LISTNUM 1 \l 15771             This means that the entire contribution will be directed back into the support, promotion, education and development of musical talent in Northern Ontario, and Sudbury specifically.

LISTNUM 1 \l 15772             As a nonprofit organization we spend an increasing amount of time working to find the financing required to enable our programs and services.  This is nothing new.  This is a battle waged by most nonprofit organizations.  Every year we must begin anew the search for support from the public and private sectors allocating staff time to this function.


LISTNUM 1 \l 15773             Imagine, if you would, what an investment of this nature per year would mean to a small nonprofit organization.  We have talked about expanding our programs and services, but we must also recognize what this means in terms of staff resources and expertise.  Greater financial capacity equals more hands‑on staff time with clients, conducting outreach and providing the essential services and programs that assist us in fulfilling our mandate and, in turn, assist the industry in our region to reach its fullest potential.

LISTNUM 1 \l 15774             Newcap's proposed investment represents a domino effect in expanded programs and services, as well as refocused staff resources.

LISTNUM 1 \l 15775             Finally, I would like to touch upon the length of the commitment.  We have been very fortunate in our relationship with all levels of government to date and have been able to access multi‑year funding which, as you can appreciate, means greater stability for our organization to carry out its activities.


LISTNUM 1 \l 15776             Our current agreements are over three years.  This provides us with the opportunity to launch a program in year one, improve upon it in year two, and then gives us year three to find the financing required to maintain it beyond that timeframe.

LISTNUM 1 \l 15777             Double that and add a year, which equals seven years, the stability in services and programming that this investment would afford our organization and the music industry in Sudbury and Northern Ontario, cannot be underestimated.  Public and private support can fluctuate, governments change and priorities shift.  In a way, we are held hostage to these potential changes.

LISTNUM 1 \l 15778             I'm sure I'm not the only Executive Director of an arts organization in Ontario who anxiously awaited both the federal and Ontario provincial budgets announced last week.  Support over seven years means better long‑term planning, stable accessible programs and services and increased opportunities for the music industry in the region.

LISTNUM 1 \l 15779             MFM is ready, willing and able to work with any and all radio undertakings in our region.  Our goal is to create positive impacts and opportunities for the music industry in Northern Ontario.  We are very excited and encouraged by the positive discourse that this process has created in our community.  We would like to congratulate all of the applicants for the incredible effort and thought that each has put into their proposals.


LISTNUM 1 \l 15780             In conclusion, MFM believes that Newcap has created the best overall plan with respect to benefits to the music industry in Sudbury and Northern Ontario, having put forward a thoughtful and concise application in all respects and we are confident that granting them a new radio licence in Sudbury will have a positive effect on our industry and our community.

LISTNUM 1 \l 15781             Madam Chair, Members of the Commission, thank you for your time today.

LISTNUM 1 \l 15782             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 15783             Commissioner del Val...?

LISTNUM 1 \l 15784             COMMISSIONER del VAL:  Thank you for your intervention.

LISTNUM 1 \l 15785             I just want to follow up on Vice Chair Arpin's questioning to the Newcap panel yesterday.

LISTNUM 1 \l 15786             This is along the lines:  the funding directed to your organization, which I understand is a music and film in motion organization ‑‑

LISTNUM 1 \l 15787             MR. LANDRY:  Yes.

LISTNUM 1 \l 15788             COMMISSIONER del VAL:  ‑‑ and you have clarified in your intervention today that this means the entire contribution will be directed to support development of musical talent.


LISTNUM 1 \l 15789             MR. LANDRY:  That's right.

LISTNUM 1 \l 15790             COMMISSIONER del VAL:  So you have within your infrastructure itself the ability to track the funds that go to music separately from funds going elsewhere?

LISTNUM 1 \l 15791             MR. LANDRY:  Yes, we do.

LISTNUM 1 \l 15792             In fact, most of our private sector support is directed to one or the other, so we have had to put in place very early on the capacities within our accounting systems to be able to track that.  For example, FACTOR support through collective initiatives, the SOCAN Foundation and, on the film and television side, the CTV Script Development Fund.

LISTNUM 1 \l 15793             COMMISSIONER del VAL:  Thank you.  That's my only question.  Thank you for your intervention.

LISTNUM 1 \l 15794             MR. LANDRY:  Thank you.

LISTNUM 1 \l 15795             COMMISSIONER del VAL:  Thank you, Madam Chair.

LISTNUM 1 \l 15796             THE CHAIRPERSON:  Commissioner Cram...?

LISTNUM 1 \l 15797             COMMISSIONER CRAM:  Thank you, Mr. Landry.

LISTNUM 1 \l 15798             You said at page 2 of your paper today, in the second paragraph, that:


"Newcap has made commitments ... that will help to address the lack of access ..."

LISTNUM 1 \l 15799             And at the bottom of that paragraph you are saying that they were committing to:

"... giving new unsigned bands airtime for interviews and demos."

LISTNUM 1 \l 15800             They have a station in Sudbury right now.  Do they do that?

LISTNUM 1 \l 15801             MR. LANDRY:  As far as I know local musical content isn't available on their existing station, however in discussions hat we have had they have always been very open to that, but that it must fit within the existing format.

LISTNUM 1 \l 15802             COMMISSIONER CRAM:  Their format, yes.

LISTNUM 1 \l 15803             All right.  Thank you.

LISTNUM 1 \l 15804             THE CHAIRPERSON:  Mr. Landry, thank you very much for your participation.  We don't have any other questions for you.

LISTNUM 1 \l 15805             Thank you.

LISTNUM 1 \l 15806             MR. LANDRY:  Thank you.

LISTNUM 1 \l 15807             THE CHAIRPERSON:  Madam Secretary.


LISTNUM 1 \l 15808             THE SECRETARY:  The last appearing intervention will be presented by STAK Productions.

LISTNUM 1 \l 15809             I don't think they are in the room.

LISTNUM 1 \l 15810             This completes the list of appearing intervenors, therefore Phase III.

LISTNUM 1 \l 15811             THE SECRETARY:  We will now proceed to Phase IV in which applicants can reply to all interventions submitted on their application.  Applicants appear in reverse order.

LISTNUM 1 \l 15812             We will ask the Haliburton Broadcasting Group.

‑‑‑ Pause

LISTNUM 1 \l 15813             THE SECRETARY:  They just mentioned that they will not appear in Phase IV.

LISTNUM 1 \l 15814             Then I would ask Larche Communications.

LISTNUM 1 \l 15815             They will not appear in Phase IV.

LISTNUM 1 \l 15816             Then Connelly Communications, please come to the table.

‑‑‑ Pause

REPLY / RÉPLIQUE

LISTNUM 1 \l 15817             MR. CONNELLY:  It is one page.

‑‑‑ Laughter / Rires


LISTNUM 1 \l 15818             MR. CONNELLY:  I just want to thank you for the opportunity to respond to interventions regarding our application.  We consider all the letters of support that we have received as evidence to our excellence in not only programming but community support.

LISTNUM 1 \l 15819             Although CIRPA was not here today, they made several good points in their comments to all the applicants and we feel as though our application meets many of the requests and concerns that CIRPA has raised in their intervention.

LISTNUM 1 \l 15820             With respect to the low‑power Christian music station presently broadcasting, it is broadcasting again at 101.1 in the Sudbury area, which is the frequency that we proposed, and we are committed to helping them if we are granted the licence at the same frequency.  We are going to pay for a new technical brief for them to relocate.


LISTNUM 1 \l 15821             I would also like to thank the individuals and organizations who wrote letters of support that were included in our original application to the Commission and, more specifically, some of the people who wrote letters during the intervention period, including the three levels of government we deal with in our present markets highlighted by Charlie Angus, our Federal MP.  Charlie was a musician in his first career before joining Parliament and was a member of the Grievous Angels who, I can tell you, we played on both of our radio stations.

LISTNUM 1 \l 15822             We could not have asked for a better endorsement, though, than the one sent in by Canadian Music Hall of Famer Tom Cochrane, who wrote:

"I can assure you that the entire city will quickly embrace the station as though it were their own."  (As read)

LISTNUM 1 \l 15823             Those words sum up our intentions for the Sudbury market if we are successful in our application.

LISTNUM 1 \l 15824             So I would just once again like to thank the Commission and the CRTC staff for the opportunity to appear here this week.

LISTNUM 1 \l 15825             Thank you.

LISTNUM 1 \l 15826             THE CHAIRPERSON:  Thank you very much, Mr. Connelly.

LISTNUM 1 \l 15827             Madam Secretary...?

LISTNUM 1 \l 15828             THE SECRETARY:  Newcap just advised me that they will not be appearing in Phase IV.

LISTNUM 1 \l 15829             I would now ask William Wrightsell to come to the presentation table.

‑‑‑ Pause

REPLY / RÉPLIQUE


LISTNUM 1 \l 15830             MR. WRIGHTSELL:  I have one page as well.  I will try to be brief.

LISTNUM 1 \l 15831             I just wanted to touch on the sports comment that was made yesterday.  We reviewed paragraph 183 of the new 2006 Commercial Radio Policy and note that the reference to local programming contains inclusions for spoken word, sports being included in that programming.

LISTNUM 1 \l 15832             Although local news coverage is a cornerstone to our application, we will, on occasion, offer sports information during our spoken word programming, but sports minutes will be additional so that will leave our news content number, which is 493 minutes, intact, just so you know.

‑‑‑ Pause

LISTNUM 1 \l 15833             MR. WRIGHTSELL:  I would like to thank all the positive intervenors as well on our behalf, the Sudbury business community.  We had 200 signatures from the public and numerous letters of support from council and we thank all of you for the hearing.

LISTNUM 1 \l 15834             Thank you Madam Chair, Co‑Chair, Commissioners and staff, for your diligence in the questioning and it is a privilege to have appeared before you.

LISTNUM 1 \l 15835             Thank you.


LISTNUM 1 \l 15836             THE CHAIRPERSON:  Thank you, Mr. Wrightsell.

LISTNUM 1 \l 15837             Madam Secretary...?

LISTNUM 1 \l 15838             THE SECRETARY:  I would ask Joco Communications to come to the presentation table, please.

‑‑‑ Pause

REPLY / RÉPLIQUE

LISTNUM 1 \l 15839             MR. CORMIER:  I have no script or anything, but I want to take this opportunity to thank all my supporters.  We had some really good support letters and you guys had a chance to read them.

LISTNUM 1 \l 15840             I also want to thank my wife that joined me.  It was a good experience.  It was great.  We have had a good time here, so thanks a lot and I'm sure the CRTC will make the right choice here.

LISTNUM 1 \l 15841             Madam Chair, Vice Chair and the rest, thanks a lot.

LISTNUM 1 \l 15842             THE CHAIRPERSON:  Thank you, Mr. Cormier.

LISTNUM 1 \l 15843             Madam Secretary...?

LISTNUM 1 \l 15844             THE SECRETARY:  This completes the consideration of Items 13 to 18 on the Agenda.

LISTNUM 1 \l 15845             THE CHAIRPERSON:  Thank you very much.


LISTNUM 1 \l 15846             We will now break for lunch and resume at 1:30.

LISTNUM 1 \l 15847             Thank you.

‑‑‑ Upon recessing at 1205 / Suspension à 1205

‑‑‑ Upon resuming at 1330 / Reprise à 1330

LISTNUM 1 \l 15848             THE CHAIRPERSON:  Order, please.

LISTNUM 1 \l 15849             Madam Secretary...?

LISTNUM 1 \l 15850             THE SECRETARY:  For the record, I would like to mention that Larche Communications and Haliburton Broadcasting Group has filed their breakdown of spoken word and it will be available in the examination room.

LISTNUM 1 \l 15851             We will now proceed with Item 19 on the Agenda, which is an application by The Canadian Documentary Channel Limited Partnership Application on behalf of the partners of The Canadian Documentary Channel limited Partnership ‑‑ collectively the applicant ‑‑ for authority to effect a change to the effective control of the national English‑language Category 1 specialty programming undertaking known as The Canadian Documentary Channel, and for a new licence to continue its operation.


LISTNUM 1 \l 15852             Appearing for the applicant is Mr. Gary Maavara, who will introduce his colleagues.  You will then have 20 minutes to make your presentation.

LISTNUM 1 \l 15853             Thank you.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 15854             MR. MAAVARA:  Thank you.

LISTNUM 1 \l 15855             Good afternoon, Madam Chair, Commissioners, CRTC staff, legal counsel.  My name is Gary Maavara, I am Vice President and General Counsel of Corus Entertainment Inc., the managing majority partner of the Canadian Documentary Channel Limited Partnership.

LISTNUM 1 \l 15856             Before we begin our presentation, I will briefly introduce the Members of the Panel.

LISTNUM 1 \l 15857             On my left if Richard Stursberg, Executive Vice President of CBC English Television.

LISTNUM 1 \l 15858             Beside Richard is Kirstine Layfield, Executive Director, Network Programming at the CBC.

LISTNUM 1 \l 15859             To her left is Mark Starowicz, Executive Director of Documentary Programming for CBC Television.

LISTNUM 1 \l 15860             Next to him is Rob Scarth, CBC's Director of Regulatory Affairs.

LISTNUM 1 \l 15861             On my right is Michael Harris, Vice President and General Manager of The Documentary Channel.


LISTNUM 1 \l 15862             The application before you to transfer Corus's ownership interest in The Documentary Channel to CBC is a straightforward one in our view.  It is a plan that will breathe new life into this channel and provide it with the opportunity to succeed.

LISTNUM 1 \l 15863             The members of the partnership are proud of the accomplishments of The Documentary Channel.  There are not many Category 1 specialty channels that have broadcast so many new and compelling Canadian and international programs that have won so many awards and have garnered so much audience acclaim.

LISTNUM 1 \l 15864             That said, the channel has lost money since its launch and the present debt, which Corus has been funding, exceeds $16 million.  The Documentary Channel is simply not viable with this outstanding debt.  We believe that it does have the ability to generate modest earnings, but not enough to ever pay back this debt.

LISTNUM 1 \l 15865             The channel also does not fit within the Corus programming strategy, which mainly targets children and women.


LISTNUM 1 \l 15866             Programming is produced and acquired for use on many channels and new platforms.  Corus has often talked about the need for large entities to compete for, acquire and produce copyright works.  This reality is being played out around the world and, of course, in Canada.

LISTNUM 1 \l 15867             Great programming requires scale, regardless of the format.  The Documentary Channel therefore requires a financial and operating model that removes the debt, establishes this scale and provides an ownership fit where programming can be used on other platforms.

LISTNUM 1 \l 15868             The CBC was the only logical acquirer that met those needs.  The CBC is the only other general partner in the partnership.  It is the only other broadcaster in the partnership.  It is the only partner with the scale to take on this role.  The CBC has the broadcasting presence, the programming skill and the scale to make this plan a success.

LISTNUM 1 \l 15869             For its part, Corus will absorb the debt, which will allow the channel to move forward.

LISTNUM 1 \l 15870             Richard.

LISTNUM 1 \l 15871             MR. STURSBERG:  Thank you, Gary.

LISTNUM 1 \l 15872             The CBC is prepared to acquire Corus' interest in the channel and adopt an operating strategy that will keep it going.  We applaud Corus for proposing a solution whereby they absorb the debt accumulated by the channel in order to provide the rest of the partnership with an opportunity to succeed.


LISTNUM 1 \l 15873             We are confident that we can make this work.  Documentary programming is a genre CBC strongly supports across all of its platforms, both in television and in radio.  The Documentary Channel is a good fit within CBC's family of services and the cross‑platform support CBC can bring to bear can help the channel and bring it to a financial breakeven point and ultimately to profitability.

LISTNUM 1 \l 15874             The channel plays a unique role in the system, providing a dedicated platform for documentary programming and an important window for Canadian documentary film‑makers.

LISTNUM 1 \l 15875             The submissions from the producer associations in this proceeding are testament to how much importance producers attach to the channel.  We share that view.  We believe the channel is important, too, and CBC is prepared to shoulder the responsibility to keep the service going.

LISTNUM 1 \l 15876             CBC's commitment to the genre, its position as the other general partner, and its long tradition of excellence in documentary programming, makes The Documentary Channel a natural fit for the CBC.  CBC commissions and produces a significant amount of documentary programming on CBC television and on Newsworld.


LISTNUM 1 \l 15877             There are dedicated windows on both services for documentary programming, "Doc Zone" on CBC television and "The Lens" on CBC Newsworld to name but two.

LISTNUM 1 \l 15878             The documentaries that CBC supports, both its own and those commissioned from independent producers, garner a significant number of national and international awards.

LISTNUM 1 \l 15879             Approval of this transaction is clearly in the public interest.  The Documentary Channel will remain open for business, continuing to enlighten, inform and entertain its small but loyal audience, and here will continue to be a dedicated outlet for the creative work of Canada's documentary producers and film‑makers.

LISTNUM 1 \l 15880             The Documentary Channel will also add to the strength of the CBC and contribute to its relevance to Canadians and its ability to thrive in a highly fragmented television environment.  With this fresh start, we are convinced that The Documentary Channel can survive and prosper.

LISTNUM 1 \l 15881             In this proceeding some parties have raised concerns with this application, notably the National Film Board of Canada, the Documentary Organization of Canada, the CFTPA, the APFTQ and they Observatoire du documentaire.


LISTNUM 1 \l 15882             We are pleased to report that the National Film Board has informed us and the CRTC that it has withdrawn its interventions in this proceeding and it has signed the Special Resolution of the Partners Approving this transaction.  We look forward to a constructive and productive working relationship with the National Film Board in this partnership.

LISTNUM 1 \l 15883             Producers acknowledge the important role that CBC plays in support of documentary programming, but they are concerned that too many of those eggs may be concentrated in one basket.

LISTNUM 1 \l 15884             We think the public record is pretty clear with respect to CBC's intentions.  Approval of this application will keep the channel open for business.  The channel will operate according to its existing conditions of licence.  CBC remains committed to the documentary genre across all of its services and will maintain its level of support for independent documentary programming.

LISTNUM 1 \l 15885             CBC will respect and support the distinct nature of this service.

LISTNUM 1 \l 15886             Finally, CBC will license programming for The Documentary Channel from independent producers with separate licence fees.


LISTNUM 1 \l 15887             In closing, there has been a significant amount of interest in this application.  The Documentary Channel is a unique service and it has become an important outlet for Canadian documentary producers.  In some respects, they regard it as their channel.

LISTNUM 1 \l 15888             We are proud of that, because it means The Documentary Channel has done a good job.  With this application, we are simply looking for the opportunity to continue to do that job and make The Documentary Channel even better.

LISTNUM 1 \l 15889             Thank you for your attention.  Those are our opening comments and we would be pleased to respond to any questions you have.

LISTNUM 1 \l 15890             THE CHAIRPERSON:  Thank you, Mr. Stursberg, Mr. Maavara.

LISTNUM 1 \l 15891             Vice Chairman Arpin...?

LISTNUM 1 \l 15892             COMMISSIONER ARPIN:  Thank you, Madam Chair.

LISTNUM 1 \l 15893             Obviously I think your oral presentation probably answers all my questions but that being said, I apologize if there is some redundance.  Obviously they were prepared before I had access to your oral presentation.


LISTNUM 1 \l 15894             But allow me to say that this application would not have had to reach the status of an appearing item if there had been no intervenor, so in order to set the stage for your presentation I will start with some questions that are based initially on the CRTC Decision 2455, since some of the intervenors are raising issues that are driven from the existing licence.

LISTNUM 1 \l 15895             So I will go through some of the statements that are in the decision to make sure that the CBC has a good understanding of what the decision was saying and is pursuing in the same direction for which the service has been licensed initially.

LISTNUM 1 \l 15896             Obviously you just said that you did agree with the nature of the service, so there surely is no need to go over the nature of the service, but there were some statements made regarding various issues like contributions to diversity, Canadian content, Canadian programming and expenditures, and I want to review some of them to record your agreement or any comments that you want to make.

LISTNUM 1 \l 15897             Regarding Canadian content, the licence was saying that for the first six years the Canadian content requirement will be 66 percent, and for the seventh year it will be 75 percent.


LISTNUM 1 \l 15898             I understand that you just currently are in your sixth year of operations so that you are still on the commitment of 66 percent Canadian content, but are you still planning to do 75 percent Canadian content next year?

LISTNUM 1 \l 15899             MR. STURSBERG:  Yes, we are.

LISTNUM 1 \l 15900             COMMISSIONER ARPIN:  Further, that there was a commitment to broadcast a minimum of 511 hours original Canadian programming over the licence term.  The original programming will be a mix of new programs from CBC and NFB and commissioned programming from independent producers.

LISTNUM 1 \l 15901             Are you still on line to meet that requirement?

LISTNUM 1 \l 15902             MR. HARRIS:  Yes, we are.

LISTNUM 1 \l 15903             COMMISSIONER ARPIN:  Yes, you are.

LISTNUM 1 \l 15904             Will you do better than 511 hours or is that still the target?

LISTNUM 1 \l 15905             MR. STURSBERG:  I think in general terms our intention is to meet all the conditions of licence.  If we can do better we will be pleased, but at the very least that we will meet all the conditions of licence.


LISTNUM 1 \l 15906             COMMISSIONER ARPIN:  Some were not necessarily conditions of licence, some were only commitments, particularly regarding the independent production where there was a commitment to spend at least 50 percent of the annual acquisition budget on programs from independent producers.  That was to represent almost 200 hours per year of such material.

LISTNUM 1 \l 15907             Are you still committed to that level of acquisition from independent producers?

LISTNUM 1 \l 15908             MR. STURSBERG:  Yes, we are.

LISTNUM 1 \l 15909             COMMISSIONER ARPIN:  Regarding interactivity, it is becoming more and more of interest.

LISTNUM 1 \l 15910             Does The Documentary Channel have a dedicated website currently?

LISTNUM 1 \l 15911             MR. MAAVARA:  Yes, it does.

LISTNUM 1 \l 15912             COMMISSIONER ARPIN:  It does?

LISTNUM 1 \l 15913             MR. MAAVARA:  It's quite a compelling site.

LISTNUM 1 \l 15914             COMMISSIONER ARPIN:  And the CBC is acquiring the website at the same time?

LISTNUM 1 \l 15915             MR. MAAVARA:  Yes.

LISTNUM 1 \l 15916             COMMISSIONER ARPIN:  So it will become an integral part of the CBC internet proposal?

LISTNUM 1 \l 15917             MR. MAAVARA:  Yes, it will.

LISTNUM 1 \l 15918             COMMISSIONER ARPIN:  Are you using other platforms now, other than television, to carry some of the programming that The Documentary Channel is acquiring or producing?


LISTNUM 1 \l 15919             MR. MAAVARA:  Yes.  Actually, we are quite thrilled with some of the activity we are doing in these new areas such as video‑on‑demand.  We have had terrific success with The Documentary Channel branded VOD service.

LISTNUM 1 \l 15920             COMMISSIONER ARPIN:  Now, there was also a commitment to donate, starting with the fourth year, a minimum of $100,000 in scholarships on a yearly basis and to increase that amount to $200,000 annually in the sixth year of operation.

LISTNUM 1 \l 15921             Have you started to donate those bursaries?

LISTNUM 1 \l 15922             MR. MAAVARA:  We haven't started the program yet.  We still hope to get to that, and of course I think Mr. Stursberg would say that they would remain keen on doing that.

LISTNUM 1 \l 15923             Of course part of the benefits would be incremental to that and they relate to a similar kind of venture.

LISTNUM 1 \l 15924             Of course the difficulty that we had was the service on an annual basis just didn't hit targets with respect to revenue and we kept getting deeper and deeper into the hole on the debt side.  So we weren't able to move forward on that one.


LISTNUM 1 \l 15925             But with respect to all the conditions, we are fully in compliance and, for example, in the area of spending we actually have exceeded the conditions of licence.

LISTNUM 1 \l 15926             COMMISSIONER ARPIN:  Mr. Stursberg, obviously it is a liability that you are acquiring because the community surely is expecting that those bursaries will eventually be given out.  I notice that it is also part of your commitment regarding tangible benefits to allocate money for bursaries as well.

LISTNUM 1 \l 15927             Are they the same bursaries that we are talking about or are they different bursaries?

LISTNUM 1 \l 15928             MR. STURSBERG:  No, they are different.

LISTNUM 1 \l 15929             I just would make a point.  I think that's right that, in terms of the scholarship programs ‑‑ just a couple of little points.

LISTNUM 1 \l 15930             First, the commitment that was originally made by The Documentary Channel in 2000, as I understand it, was neither really a condition of licence nor an expectation of licence.

LISTNUM 1 \l 15931             COMMISSIONER ARPIN:  No, no, exactly, but it is a commitment made by the applicant.


LISTNUM 1 \l 15932             MR. STURSBERG:  Right.  Subject to their actually being able to get the channel in some kind of shape.  But, as you heard, they struggled with that and found themselves, you know, sort of falling $16 million into the hole.

LISTNUM 1 \l 15933             We hope that we are going to be able to take this channel to profitability.  I would not make an undertaking to spend this money on bursaries until such time as we had gotten the channel to profitability.

LISTNUM 1 \l 15934             Now, we have said, however, that with respect to the benefits associated with the channel, there is a series of ‑‑ it's $100,000 benefit, and that one we would certainly respect.

LISTNUM 1 \l 15935             COMMISSIONER ARPIN:  So somehow what you are telling us is that you wanted to ‑‑ that this commitment be waived from the engagement that The Documentary Channel took at the time of filing its application?

LISTNUM 1 \l 15936             MR. MAAVARA:  No, there is nothing in the record that suggests that and I ‑‑ again, of course ‑‑

LISTNUM 1 \l 15937             COMMISSIONER ARPIN:  But that's what I'm hearing today ‑‑

LISTNUM 1 \l 15938             MR. MAAVARA:  Of course ‑‑


LISTNUM 1 \l 15939             COMMISSIONER ARPIN:  ‑‑ obviously that Corus has not made the expense and Corus will be leaving the organization at the end of ‑‑ if ever the application is approved.  So the commitment obviously has been taken by the limited partnership, but the general partner until today has not delivered on its commitment.

LISTNUM 1 \l 15940             There may be good reason that Mr. Maavara and Mr. Stursberg just explained, saying that obviously the business plan as filed at the time of the application has not been met, and at the end, as your oral presentation is saying, Corus has already ‑‑ will be assuming a $16 million loss if the Commission approves the acquisition by the CBC of the partnership, of the general partnership.  They were going to increase their place in the partnership, but they also will become the general partner without having the liability to give $100,000 a year into scholarships.

LISTNUM 1 \l 15941             MR. STURSBERG:  Well, as I say, our preference would be, first of all, to bring the channel into a healthy financial state and then, as you point out, the channel has not met, you know, what it had hoped to do, which was to put up the scholarships.  It has not been able to do that because of its financial situation.  So we take the view that the first thing is to get into good financial shape.


LISTNUM 1 \l 15942             But we recognize that, you know, the channel has interesting opportunities to be able to do things with young film‑makers and that is precisely why what we did was to try to direct the benefits to that question.  So the benefits are in fact precisely for that sort of work.

LISTNUM 1 \l 15943             COMMISSIONER ARPIN:  But the benefits are for the future.

LISTNUM 1 \l 15944             MR. STURSBERG:  That's right.  We agree with you, yes.

LISTNUM 1 \l 15945             COMMISSIONER ARPIN:  All right.

LISTNUM 1 \l 15946             Now my questions are really based on the interventions that we have received.  I will try to phrase them in a way that they are expressed generally so that we are not necessarily identifying specific intervenors.  Obviously I am interested in having the CBC's view on the issues that have been raised.


LISTNUM 1 \l 15947             The first one that I could say I have been able to identify is that with the acquisition of the controlling interest in The Documentary Channel CBC will be the dominant player in documentary in Canada, holding an almost monopoly‑like situation with fewer opportunities for independent producers.  In fact, the concern takes into consideration the role already played by the CBC in Newsworld and Country Canada which are also broadcasting documentaries.  There is there a fear that the over‑the‑air CBC television could totally vacate the documentary genre by scheduling documentaries only on its specialty services.

LISTNUM 1 \l 15948             I know that in your introductory remarks you were referring to some documentary windows that are on over‑the‑air television on the CBC network ‑‑

LISTNUM 1 \l 15949             MR. STURSBERG:  Yes.

LISTNUM 1 \l 15950             COMMISSIONER ARPIN:  ‑‑ but obviously similar arguments were made when you applied for Newsworld.  There were intervenors saying that there will be no more news on CBC.  This time the question is about documentaries.

LISTNUM 1 \l 15951             MR. STURSBERG:  Well, let me give you the same answer then.

LISTNUM 1 \l 15952             If we had wanted to take documentaries off the main channel, we could have done that a long time ago.  We have a documentary strand on Newsworld and we could have washed our hands of documentaries on the main channel.  To the contrary, documentaries have remained on the main channel, they will continue to remain on the main channel.


LISTNUM 1 \l 15953             One of the things that we moved to do just a little while back was in fact to strengthen our documentary position within the main channel by creating a group under Mark Starowitz that is responsible for documentaries, all of the documentaries on the main channel which didn't exist in the past, as part and parcel of our ongoing commitment to documentary‑making.

LISTNUM 1 \l 15954             I think it is true to say that, you know, CBC will be the most important producer and distributor of documentaries in the country, but the fact is we already are.  One of the things I would say, which I think is an important aspect of this, is that what we will be able to do, given the level of our commitment to documentaries, is actually to be able to promote to The Documentary Channel in a way that is quite impossible or it is certainly very difficult for Corus to do as effectively.  Precisely because we have documentaries on the main channel and because we have Newsworld, documentaries on Newsworld, we can use both of those platforms to promote to The Documentary Channel itself and strengthen that channel as a vehicle.


LISTNUM 1 \l 15955             We have said, I think it is fair to say fairly clearly, to all the documentary film‑makers that we understand their concerns that what they don't want to see happen is that somehow or another The Documentary Channel would become a place where we would simply put on in repeats things that we had on the main channel or on Newsworld and that somehow we would diminish the status of The Documentary Channel.

LISTNUM 1 \l 15956             But of course the truth is, we bought The Documentary Channel not because we wanted to get to fail, we bought The Documentary Channel because we wanted it to succeed.  We want The Documentary Channel to be better.  And we know that if The Documentary Channel has nothing on it except the things that are on Newsworld and the CBC right now, then there would be no compelling reason for people to come to it.

LISTNUM 1 \l 15957             So we have told all the documentary film‑makers, and in fact we have made written undertakings to them, and indeed to the Commission in our filings, that we absolutely intend to ensure that all of the money that is currently spent on The Documentary Channel in terms of independent productions that go onto it will continue to be spent that way.

LISTNUM 1 \l 15958             One of the points we have made, and I think it would be helpful if the Commission could reinforce this point, is that it would be helpful to us if the envelope associated with The Documentary Channel inside the Canadian Television Fund were in fact transferred as part of the transaction, if you agree to it.


LISTNUM 1 \l 15959             We have said beyond that we are perfectly happy for that envelope to stand outside the CBC's main envelope if that gives comfort to the documentary film‑makers to know that that money could not be spent anywhere except with respect to The Documentary Channel itself.

LISTNUM 1 \l 15960             COMMISSIONER ARPIN:  The other fear that I can see from the intervenors is that the CBC will, at the end of the day, be the only window for documentary production while with The Documentary Channel under the purview of Corus there was an ability to license documentaries through various windows.  Now that The Documentary Channel will go under the aegis of the CBC, there will end up being only one window and maybe only one decision‑maker on which documentary genre will be produced or which producer will be selected.

LISTNUM 1 \l 15961             MR. MAAVARA:  This is a question I think Corus can answer before CBC does.

LISTNUM 1 \l 15962             That perspective, I would submit, is a tad superficial in the sense that it ignores all of the other places that documentaries are being exhibited at this time on television, starting with the pay channels, including the Corus Movie Central and Encore channels, we do carry feature documentaries.


LISTNUM 1 \l 15963             But then there are channels such as History and literary a lot of the grist for their mill is documentary programming.  CanWest for example has made a big commitment to documentaries as part of its programming identity and both funds and broadcasts documentaries on its broadcast channel as well as its specialty channel.

LISTNUM 1 \l 15964             So The Documentary Channel is an important venue for documentaries, as is the CBC, but when you really think about it there are probably four or five other places that Canadian independent production can place their programming.

LISTNUM 1 \l 15965             MR. STURSBERG:  I think that is exactly right.  Beyond the History Channel there is obviously channels like Discovery and Bravo that are serious commissioners of very important documentaries.

LISTNUM 1 \l 15966             COMMISSIONER ARPIN:  Are you looking at having a centralized unit within the CBC to grant licence for documentaries, or will you keep a window at The Documentary Channel and another one at the CBC and a third one at Country Canada?

LISTNUM 1 \l 15967             How is it really working now and how will it be working in the future?


LISTNUM 1 \l 15968             MR. STURSBERG:  Well, it's going to work in the future more or less the way it's working now.  It is going to have its own staff that will be responsible for The Documentary Channel in the same way as we have, you know, our own staff who are responsible for Newsworld, our own staff who are responsible for Country Canada.

LISTNUM 1 \l 15969             What will happen is, there will be a head of The Documentary Channel.  The head of The Documentary Channel will report to Kirstine as head of the Network Programs Office and that person, or persons rather, will be responsible for scheduling and managing the channel, for acquiring product on the channel and for commissioning independent documentaries from the independent film‑makers.

LISTNUM 1 \l 15970             So within the CBC it will operate very similarly to the way it has been operating in the past.

LISTNUM 1 \l 15971             COMMISSIONER ARPIN:  Now there are some concerns that ‑‑ and I will seek both Corus and CBC to comment on an allegation made by some intervenors that the cash price base paid by CBC is under market value, since Corus benefited from the from the renewal negotiation of its affiliation agreement for Kingston and Peterborough.

LISTNUM 1 \l 15972             Could you please comment on that?


LISTNUM 1 \l 15973             MR. MAAVARA:  The question of the price for the channel is an interesting one.  It is more of an academic one than a practical one.

LISTNUM 1 \l 15974             COMMISSIONER ARPIN:  Because there is also the fact that some others or the same are also raising that the real price is $16.3 million rather than ‑‑

LISTNUM 1 \l 15975             MR. MAAVARA:  Well, that's an easy argument.  That as a matter of law and policy is just simply incorrect as we stated in our reply to interventions.

LISTNUM 1 \l 15976             The purpose of ‑‑ and this goes to the question of the significant benefits, the benefits have always been applied to in the context of the non‑competitive nature of licence transfers in Canada and the benefit was effectively calculated on the basis of the benefit to the vendor and the point of that exercise is to disincent the trafficking of licences and also to provide "a public benefit" to a licence transfer in the context of a non‑competitive process.


LISTNUM 1 \l 15977             There are several citations that we make in the brief where the Commission has looked at this and where the vendor is being relieved of the debt then the benefit test applies to the whole amount.  This is kind of an anomalous situation, in that we are in fact taking and keeping the debt and we have already written it off.

LISTNUM 1 \l 15978             So our submission is that as a matter of law and policy is that that point of view is just plain wrong.

LISTNUM 1 \l 15979             But then, to get to the first part of your question which was what is the proper market value of this, well, you know, it is really very difficult.  The context that we were looking at this started with both the legal relationship that we have with the CBC and the other partners as well as the non‑legal relationship.

LISTNUM 1 \l 15980             Under the partnership agreement, were we to find a third‑party purchaser ‑‑ and, you know, I'm not shy about admitting that we have had some people come to us and say "Well, we would have paid you more than that", but the point of the exercise was, under the partnership agreement if we had a third‑party offer then the CBC and the others would have a right to match that offer.


LISTNUM 1 \l 15981             We looked at that and we said ‑‑ and we understood the numbers looking out for the next seven years and we basically said to ourselves, "If we take the debt away from the service, then this service can be a breakeven or slightly better service."  And we said "If the cost of the service is going to be anything more than effectively ‑‑ well $1 million is not nominal but it's not a huge amount, if you get into a number that is any higher than that then effectively what you are doing is you are establishing the debt again and you are saying that the public broadcaster is going to have to find a way to finance this.

LISTNUM 1 \l 15982             As we said in our reply to the interventions, that is not a discussion really with the CRTC, it is really to the funders.

LISTNUM 1 \l 15983             That said, the owners and directors and management of Corus felt that "We are going to write this off anyway.  We have a relationship with the CBC and they have the ability to make this a terrific channel and we are very proud of what we have accomplished to date, the problem is we just haven't been able to sell very much advertising associated with it and they can make a go of it and it's in the public interest for them to have it, they can run it on a small profit basis and, as a result, it is not going to be a tax on the public purse, if you want to put it that way, and as such this agreement is greatly in the public interest."


LISTNUM 1 \l 15984             As to whether the benefits should be higher, if the benefits, as I mentioned earlier, with the higher price for the purchase, if you called them benefits instead, they would still go to the situation where you would have to ask yourself:  Is the Government of Canada prepared to give the CBC more money to run this channel?  Corus kind of answered that question by saying "We will accept $1 million and that's fine by us."

LISTNUM 1 \l 15985             COMMISSIONER ARPIN:  Now, regarding the renewal of the Kingston and Peterborough affiliation agreements, some have argued that it might have been a sweeter deal ‑‑ I'm not necessarily using their terms ‑‑ than the terms usually on which they CBC negotiates affiliation agreements.

LISTNUM 1 \l 15986             Do you have any comments to make?

LISTNUM 1 \l 15987             MR. STURSBERG:  Yes, I do.

LISTNUM 1 \l 15988             The terms on which the affiliation agreements were extended are identical to the terms that they were on previously.  In other words, nothing has changed.  All we did was extend them over the next ‑‑ four years I think it is.  They start in 2007.

LISTNUM 1 \l 15989             But the financial arrangements underpinning the extension of the agreements are identical to the financial arrangements that were in the previous agreements.  So there has been no sweetening of the affiliation agreements.


LISTNUM 1 \l 15990             I think it is very important to see these things for what they are.  These are two completely separate transactions.  It turned out that they happened at the same general period of time because of when the affiliation agreements expired and when it was that we were having this conversation with Corus.

LISTNUM 1 \l 15991             There is no increase to the money in the affiliation agreements.  If you are interested we would be happy to file with you in confidence the old agreements plus the new ones, we have no problem with that, and you will see they are identical.

LISTNUM 1 \l 15992             COMMISSIONER ARPIN:  Well, we ‑‑

LISTNUM 1 \l 15993             MR. STURSBERG:  So there is no sort of bump in money that somehow or another has alluded people which should be tacked on as part and parcel of the acquisition price.

LISTNUM 1 \l 15994             You know, the other thing I would just add to what Gary was saying is, when you have a channel that is losing this amount of money it is very difficult to calculate what its worth.  Typically we calculate these things as multiples of EBITDA, but when you have negative margin then, you know, it's sort of tricky.


LISTNUM 1 \l 15995             People have said, as Gary was mentioning, that there has been some discussion that somehow the $16 million should be rolled into the transaction price.  That would be true if we had assumed the $16 million liability.  But we didn't, and we are enormously grateful to Corus that they have agreed to eat the $16 million loss.

LISTNUM 1 \l 15996             Indeed, I think that what Corus has done here is something that is very much in the public interest because I fear that if the channel had continued to go the way it was, hobbled with $16 million in debt, it would have been very difficult for the channel ever to have been viable on a going‑forward basis.  So I think that what Corus has done is very much in the public interest and I think it's in the interest of the documentary community as a whole.

LISTNUM 1 \l 15997             COMMISSIONER ARPIN:  Since you are volunteering to allow the Commission, on a confidential basis, to see the former and the new affiliation agreement, could we ask you to file them with the Commission and when do you think we could get them?

LISTNUM 1 \l 15998             MR. MAAVARA:  We would be pleased to file them on a confidential basis.


LISTNUM 1 \l 15999             Just to add to Richard's comments with respect to the changes in the agreement, the only thing that we changed in the agreement were the clean‑up of some language that was in place.

LISTNUM 1 \l 16000             You have to understand that these stations have been affiliates of the CBC for 50 years.  We are proud of the fact that we just had our 50th anniversary of those stations.  As one can imagine, I think the last agreement was done 10 years ago so we cleaned up some of the language to reflect things such as satellite delivery of the signal and that sort of thing.  But from a substantive and practical standpoint they are the same agreements.

LISTNUM 1 \l 16001             With respect to the timing, I will take the Commission back to last winter.  We announced the two agreements in May, but in a world of lots of things to do, and the same people kind of do the same stuff, when you sit down in a meeting room you have an agenda of things to talk about and what we were facing at that time, as you will recall, and as Richard referred to, our affiliation agreements were coming up to an expiry date.  We were also looking at the potential for a CBC licence renewal and we were looking at the licence renewal of the documentary as well as other channels.


LISTNUM 1 \l 16002             What has happened since then was the CBC renewal was pushed back, as well as the specialty renewals, so we were working on all the stuff and we got the agreements done.  We, as a publicly traded company, are required, when we divest of something or do any kind of material agreement, to announce that and I would venture to add that the CBC in a sense is very similar to us because it is publicly funded, so we said we should get all this stuff out there by way of press releases.  So that is how they are coincidental.

LISTNUM 1 \l 16003             COMMISSIONER ARPIN:  Yes. Because there is no reference in the agreement regarding The Documentary Channel, but there was press release issues.  That is how the intervenors came to know that those affiliation agreements had been renewed.

LISTNUM 1 \l 16004             MR. MAAVARA:  That is correct.  Both CBC and Corus, we, subject to our obligations under the securities laws of both Canada and the United States, because we are traded on the New York Stock Exchange, issued releases on both of those things.

LISTNUM 1 \l 16005             COMMISSIONER ARPIN:  Over and above the news release, Mr. Stursberg has volunteered to provide the Commission on a confidential basis copies of the former and the current affiliation agreements.

LISTNUM 1 \l 16006             We don't need to receive it from the two parties obviously.  I take it for granted they are one in the same.

LISTNUM 1 \l 16007             MR. STURSBERG:  We hope so.


‑‑‑ Laughter / Rires

LISTNUM 1 \l 16008             COMMISSIONER ARPIN:  Which one of you will provide us with a copy of the affiliation agreement and when?

LISTNUM 1 \l 16009             MR. STURSBERG:  We will do it and we will do it in the next couple of days.

LISTNUM 1 \l 16010             Is that okay, Rob?

LISTNUM 1 \l 16011             MR. SCARTH:  Yes.  That is fine.

LISTNUM 1 \l 16012             COMMISSIONER ARPIN:  Thank you.

LISTNUM 1 \l 16013             My final question.  I think I heard you in your oral presentation, Mr. Stursberg, saying that the National Film Board ‑‑ and I was made aware of that decision also by our staff ‑‑ has withdrawn their intervention.  But my reading of the material that was provided to me with regard to the specific intervention was that there was to be a Special Resolution of the Partners on the sales of units to be signed and dated.  Obviously I understand that is what had happened with the National Film Board.

LISTNUM 1 \l 16014             Have the Special Resolutions been filed with the Commission to your knowledge and, if no, when will it take place?

LISTNUM 1 \l 16015             MR. STURSBERG:  I don't know.


LISTNUM 1 \l 16016             MR. MAAVARA:  The Special Resolution was filed originally as part of the application process absent one signature and it is my understanding that the National Film Board filed a letter with the Commission which included its signature on the Special Resolution as well.

LISTNUM 1 \l 16017             COMMISSIONER ARPIN:  I'm looking at our legal counsel.

LISTNUM 1 \l 16018             MR. STURSBERG:  I'm looking at our Director of Regulatory Affairs.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16019             MR. STURSBERG:  He is nodding his head saying that it was supposed to be filed yesterday.

LISTNUM 1 \l 16020             MR. SCARTH:  Yes, it was completed and signed yesterday.

LISTNUM 1 \l 16021             COMMISSIONER ARPIN:  And I'm looking in the room.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16022             MS DIONNE:  I am being told that we only have the letter on file.

LISTNUM 1 \l 16023             COMMISSIONER ARPIN:  So we only have the letter in the file.

LISTNUM 1 \l 16024             MR. STURSBERG:  The National Film Board is just saying that he gave a copy of the letter to Gary.  We have it right here in any event.


LISTNUM 1 \l 16025             MR. MAAVARA:  Yes.  I have a copy dated March 28, 2007 addressed to Diane Rheume Re:  Application 2006‑111‑8‑8 and I will read it:

"Dear Mrs. Rheume:

This is to inform you that we have reached an agreement with the CBC regarding this application and that we are withdrawing our intervention dated December 22, 2006 with further correspondence.

We thank you for your attention in this matter."  (As read)

LISTNUM 1 \l 16026             I have appended to this the Special Resolution of the partners of the Canadian Documentary Channel Limited Partnership, and that is signed on page 2 of 4 by the National Film Board of Canada, Mr. Claude Joli‑Coeur, Acting Government Film Commissioner and Chairperson.

LISTNUM 1 \l 16027             COMMISSIONER ARPIN:  Just while you were reading it the Secretary of the hearing gave us a copy of the letter of Mr. Joli‑Coeur and the appended document.

LISTNUM 1 \l 16028             MR. MAAVARA:  I know, Commissioner Arpin, there are a lot of people listening on the internet and I wanted to give them their money's worth.


LISTNUM 1 \l 16029             COMMISSIONER ARPIN:  I'm sure they really appreciated it.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16030             COMMISSIONER ARPIN:  Well, Madam Chair, those were my questions to the applicant.

LISTNUM 1 \l 16031             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 16032             Legal counsel...?  I'm sorry, I apologize.

LISTNUM 1 \l 16033             Commissioner Cram...?

LISTNUM 1 \l 16034             COMMISSIONER CRAM:  Or Commissioner Barb as I'm no one in my region.

LISTNUM 1 \l 16035             Is the $1 million sort of equivalent to the value of the hard assets of the channel?

LISTNUM 1 \l 16036             MR. MAAVARA:  I really can't answer that because there ‑‑ I don't think so because there really aren't very many hard assets.

LISTNUM 1 \l 16037             COMMISSIONER CRAM:  A few desks.

LISTNUM 1 \l 16038             MR. MAAVARA:  Because most of the engineering activity is provided by way of a service agreement.

LISTNUM 1 \l 16039             So there might be some rights and that sort of thing, but I think the short answer is no.


LISTNUM 1 \l 16040             MR. STURSBERG:  This was a difficult issue as to how the value it, but if I'm not mistaken, although it predates me, I think this is in the same general valuation range as when we did the Country Canada deal.

LISTNUM 1 \l 16041             MR. MAAVARA:  Yes, that's correct.

LISTNUM 1 \l 16042             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 16043             These people who you claim, Mr. Maavara, said they would pay you more money, have they ever seen your financials, the financials of the ‑‑

LISTNUM 1 \l 16044             MR. MAAVARA:  I mentioned that simply to state that, you know, there are people who have said that to us, but really that notion ignores a number of things which we set out in our reply, the first thing being the partnership agreement.

LISTNUM 1 \l 16045             You know, we had a binding contract with the other partners that if we got a third‑party offer they would have the right to match it and presumably they would make efforts to do so.


LISTNUM 1 \l 16046             The other thing is, and we make no bones about it, we weren't about to give our position in The Documentary Channel to a direct competitor.  Perhaps if somebody had come along with $16 million we may have, but that wasn't in the cards.  No one has suggested a number that is much higher than $1 million I should add.  They have been small amounts, because people do see the public filings every year and the last five years have not been particularly good.

LISTNUM 1 \l 16047             COMMISSIONER CRAM:  I'm looking at the financials, and this gets to you Mr. Harris ‑‑ and I'm so happy to see you again.  At the first of my career at CBC renewals Mr. Harris had all the answers, and at the end of my career here Mr. Harris, I know, has all the answers.

LISTNUM 1 \l 16048             There is, I notice in the financials that we have here, an average increase in administration and general expenses of around $95,000 a year.

LISTNUM 1 \l 16049             Is there a reason for that?  I mean you have more subs, but I don't ‑‑

LISTNUM 1 \l 16050             MR. HARRIS:  I believe the answer to that question is that we capture in that an increase in CRTC fees largely based on the revenue of the channel and as that goes up the administration goes up.

LISTNUM 1 \l 16051             COMMISSIONER CRAM:  Ah yes, but if Part 2 fees die, then you are in for a ‑‑

LISTNUM 1 \l 16052             Also salaries and staff, an average over the years of an increase of about $100,000.

‑‑‑ Pause

LISTNUM 1 \l 16053             MR. MAAVARA:  Which category?

LISTNUM 1 \l 16054             COMMISSIONER CRAM:  Salaries and staff.  Or maybe I have it wrong.


LISTNUM 1 \l 16055             No.  Wait, let me get my lines straight.  No ‑‑ yes, no I don't.

LISTNUM 1 \l 16056             I'm all right.  Fine, sorry.

LISTNUM 1 \l 16057             MR. HARRIS:  I would have been surprised.

LISTNUM 1 \l 16058             COMMISSIONER CRAM:  I also notice that it looks to me like your revenue is increasing on average over the years about three ‑‑ well, at about the same rate the whole time.

LISTNUM 1 \l 16059             Are you expecting that that would continue?

LISTNUM 1 \l 16060             MR. HARRIS:  We have had a great deal of difficulty selling advertising on the channel so our revenue has been going up by the cable and satellite subscriber increases which are on a pretty straight line.  I mean, there was a big jump at the beginning, but now that is pretty much proceeding at the same rate every year.

LISTNUM 1 \l 16061             COMMISSIONER CRAM:  Yes, and that is averaging 100.

LISTNUM 1 \l 16062             MR. HARRIS:  Yes.

LISTNUM 1 \l 16063             COMMISSIONER CRAM:  So you would then, therefore, expect the same kind of increase.


LISTNUM 1 \l 16064             MR. HARRIS:  Yes, unless there was a ‑‑ you know, one of the possible benefits of the sale to CBC is that because they have a bigger scale in terms of advertisers that might be interested in The Documentary Channel, that they will be able to bring more advertising to the channel.

LISTNUM 1 \l 16065             At Corus, where the main advertisers are for women and children ‑‑

LISTNUM 1 \l 16066             COMMISSIONER CRAM:  Children, yes.

LISTNUM 1 \l 16067             MR. HARRIS:  ‑‑ it was a hard sell.

LISTNUM 1 \l 16068             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 16069             So then if I look at this, it appears to me once the interest is gone that you will be, let's say profitable, within year seven.

LISTNUM 1 \l 16070             Is that your ‑‑

LISTNUM 1 \l 16071             MR. STURSBERG:  That's our plan.

LISTNUM 1 \l 16072             COMMISSIONER CRAM:  So then you have these bursaries that were "promised" but not put in any COL or anything.

LISTNUM 1 \l 16073             Is it your expectation that you would, at your renewal, perhaps say "Look, I know we promised this but we don't have enough money, didn't have enough money, so in this term we will do that"?

LISTNUM 1 \l 16074             MR. STURSBERG:  I think we could take that up when we come for the renewal, absolutely.  I think that would be a good subject to take up.


LISTNUM 1 \l 16075             But I think that our first challenge and what we would really like to get to is to make sure that the channel is on a financially sound footing so that we can guarantee that it goes ahead and is successful or we lose everything.

LISTNUM 1 \l 16076             MR. MAAVARA:  On that subject, when you look at the financials, for example, we had a $103,000 over expend last year.  One of the things, notwithstanding the financial results of the service, we did put the money on the screen, as they say, with respect to the acquisitions and we are quite proud of the program service.

LISTNUM 1 \l 16077             Just to expand on Mr. Harris's point about selling the advertising, the difficulty with The Documentary Channel, I mean we had our sales aspects to it, it is tough to twin YTV and documentary, but this is grown‑up programming.  I mean that in the sense that a lot of the programming that is on at the time that the advertisers are really looking for is rough stuff.  It's about tough subjects that a lot of advertisers don't want to go near.  That is one of the real strengths of this channel, because is it puts topics on the screen that don't necessarily get on elsewhere and we are quite proud of that.


LISTNUM 1 \l 16078             COMMISSIONER CRAM:  I was going to talk about programming because I note that year one you had high programming costs, and then two quite a precipitous drop, three up a little, four up a little, and now back almost to the same rate.

LISTNUM 1 \l 16079             Are you planning that there would be an increase in those program costs in the future that you would be spending on programming?

LISTNUM 1 \l 16080             Is Mr. Harris going to stay with you, by the way?

LISTNUM 1 \l 16081             MR. HARRIS:  I'm staying with Corus.

LISTNUM 1 \l 16082             COMMISSIONER CRAM:  Fine.

LISTNUM 1 \l 16083             MR. HARRIS:  I would like to get Corus on the record.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16084             MR. HARRIS:  In year one of course we bought ‑‑ most of these things we buy in three‑year licences and because it's an amort licence, 50 percent of that cost you saw in year one.  Then after that it was a refresh and then, of course, three years later we got hit with another we have to renew everything again.

LISTNUM 1 \l 16085             So that's why, you know, it starts as big waves and the waves get smaller as we go out.  But that's why there was that variability.

LISTNUM 1 \l 16086             But perhaps Richard should speak to what's coming up.


LISTNUM 1 \l 16087             MR. STURSBERG:  I would just repeat what I said to Commissioner Arpin, our plan is to, you know, meet all the conditions of licence in terms of spend and in terms of proportionate Canadian programming rising up to 75 percent in the seventh year.

LISTNUM 1 \l 16088             COMMISSIONER CRAM:  I want to ask about, yes, you are going to have a lot ‑‑ I mean you will need to have a lot of original material here, but you could then second or third window it on Newsworld.  I mean that would be your strategy so you would be able to amortize your costs over the services?

LISTNUM 1 \l 16089             MR. STURSBERG:  No.  Our undertaking is quite clear on this point, that the amount of money we spend commissioning for The Documentary Channel itself will not go down.  That is our undertaking.

LISTNUM 1 \l 16090             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 16091             MR. STURSBERG:  But I come back to the general point I was making:  What we don't want is, we don't want to pursue a program strategy that dilutes in any way what it is we are doing whether on the main channel or on Newsworld or The Documentary Channel.  You know, there has to be compelling reasons for people to come to these channels and so, you know, inevitably they are going to be pursuing somewhat different strategies.


LISTNUM 1 \l 16092             For example, right now on the main channel we emphasize larger documentaries with bigger and broader themes and bigger budgets.  On Newsworld we have a particular emphasis on point of view documentaries of one variety or another.  There has been some talk ‑‑ and I know there were questions raised by the documentary community as to whether we would continue to be committed to long‑form feature documentaries on the independent channel, and we said absolutely.  Because, you know, the extent to which we are going to be successful is the extent to which people are going to say, "You know, I have to go there.  I can't get that anywhere else."

LISTNUM 1 \l 16093             COMMISSIONER CRAM:  Thank you.

LISTNUM 1 \l 16094             Thank you, Madam Chair.

LISTNUM 1 \l 16095             THE CHAIRPERSON:  Thank You.

LISTNUM 1 \l 16096             Legal Counsel...?

LISTNUM 1 \l 16097             MR. AGUIAR:  Just to clarify, the prior and current affiliation agreements, could we have them filed by Tuesday April the 3rd?

LISTNUM 1 \l 16098             MR. MAAVARA:  Yes, I will file them by that date.

LISTNUM 1 \l 16099             MR. AGUIAR:  Thank you.

LISTNUM 1 \l 16100             THE CHAIRPERSON:  Thank you very much.


LISTNUM 1 \l 16101             Mr. Stursberg, Mr. Maavara ‑‑ nice to see you again Ms Layfield ‑‑ that completes our questioning.

LISTNUM 1 \l 16102             MR. MAAVARA:  Thank you.

LISTNUM 1 \l 16103             MR. STURSBERG:  Thank you, Commissioners.

LISTNUM 1 \l 16104             THE CHAIRPERSON:  Madam Secretary...?

LISTNUM 1 \l 16105             THE SECRETARY:  We will now proceed to Phase II in which other parties appear in the order set out in the Agenda to present their intervention.

LISTNUM 1 \l 16106             For the record, the intervenor Observatoire du documentaire and APFTQ listed in the Agenda will not be appearing at the hearing.

LISTNUM 1 \l 16107             The Documentary Organization of Canada and CFTPA have decided to switch places, so I would now call on CFTPA to appear and present its intervention.

‑‑‑ Pause

INTERVENTION

LISTNUM 1 \l 16108             THE SECRETARY:  Please introduce yourself and you have 10 minutes to make your presentation.

LISTNUM 1 \l 16109             MR. MAYSON:  Thank you, Madam Chair and Members of the Commission.


LISTNUM 1 \l 16110             My name is Guy Mayson and I am President and CEO of the Canadian Film and Television Production Association.

LISTNUM 1 \l 16111             On my right is Stephen Ellis of Toronto's Ellis Vision, a member with a unique 40‑year tradition of creating documentaries for Canadian and international audiences.  He is a past Chair of the CFTPA and a long‑standing member of the Association's Broadcast Relations Committee.

LISTNUM 1 \l 16112             To my left is Mario Mota, the CFTPA's Senior Director of Broadcast Relations and Research.

LISTNUM 1 \l 16113             The CFTPA represents the interests of almost 400 companies engaged in the production and distribution of English‑language television programs, feature films, and interactive media products in all regions of Canada.  Our member companies are significant employers of Canadian creative talent and assume the financial and creative risk of developing original content for Canadian and international audiences.

LISTNUM 1 \l 16114             Independent producers have provided Canadian television viewers with the choice of a Canadian perspective on our country, our world and our place in it, with such acclaimed documentaries as "Manufactured Landscapes", "The Corporation", and "Shake Hands with the Devil".


LISTNUM 1 \l 16115             At the outset, CFTPA acknowledges that this transaction is a business deal involving a specialty service that is not yet profitable.  We understand the Commission's commitment to ensure that Canadian broadcasting services are healthy enough to ensure that they make a significant contribution to the production and exhibition of high quality Canadian programming.

LISTNUM 1 \l 16116             However, we know all too well that the current environment for documentary producers is far from robust.  Shelf space for documentary on conventional television services is becoming a rare and rarer commodity.  While the value of documentary production is increasing on specialty services, funding for documentaries is not keeping pace.

LISTNUM 1 \l 16117             This transaction provides a real opportunity the public broadcaster to acquire some significantly more shelf space for documentaries.

LISTNUM 1 \l 16118             The documentary genre is a Canadian creation and the current generation of Canadian independent documentary producers is proud to contribute to this tradition, creating distinctive programming that addresses social and political issues from an in‑depth perspective.


LISTNUM 1 \l 16119             Independent producers have strong regional routes, present a distinct point of view, and their programs provoke discussion and debate.  As such, the independent production sector plays a vital role in the Canadian broadcasting system, as recognized in the Broadcast Act.

LISTNUM 1 \l 16120             The CFTPA acknowledges the important role that the CBC has always played in acquiring and commissioning documentaries from Canada's independent producers.  In fact, we consider the CBC's relationship with independent documentary producers to be critical and crucial to the sustainability and survival of this segment of the production sector.  It is essential that the public broadcaster continues to present a diversity of view and provide a voice for individual documentary producers on all of the CBC's television services.

LISTNUM 1 \l 16121             We greatly, greatly appreciate that the Commission took into account our views and those of other intervenors and called the parties to this transaction to appear.

LISTNUM 1 \l 16122             We have heard the applicant's presentation and the responses to questions posed by the Panel.  Nevertheless, there are a couple of points from our written intervention that we believe merit further elaboration.


LISTNUM 1 \l 16123             Quite frankly, we were disappointed that Corus Entertainment and the CBC appeared to brush aside some of the concerns we had raised.  In essence, their reply comments stated that these matters were irrelevant to the CRTC's consideration of this application and that the appropriate venue to discuss them would be during a future licence renewal hearing or a policy proceeding.

LISTNUM 1 \l 16124             Respectfully, we disagree.  In our view, a thorough examination of existing licence commitments and future plans are essential elements to consider in determining whether a proposed transfer of control is in the public interest.

LISTNUM 1 \l 16125             Canadian documentary producers are concerned about the lack of detail provided in the application regarding the CBC's future plans for The Documentary Channel.  They have also expressed uneasiness about the value of the ownership stake that the CBC is proposing to purchase and the related benefit commitment.

LISTNUM 1 \l 16126             Stephen...?

LISTNUM 1 \l 16127             MR. ELLIS:  Thank you, Guy.


LISTNUM 1 \l 16128             Canadian independent producers are the first to acknowledge that The Documentary Channel has brought diversity to the Canadian broadcasting system by providing a distinct window for our creations.  The CBC has committed to operate the channel under the terms and conditions of the existing licence expiring at the end of August '08.  It has also pledged to maintain the current aggregate level of expenditure on independent production, on the main network as well as Newsworld and The Documentary Channel throughout the remainder of the licence term.

LISTNUM 1 \l 16129             In order to properly understand how this transaction will increase opportunities for independent producers, however, our membership would like more information about what those levels of expenditure are and whether past commitments are being met.

LISTNUM 1 \l 16130             For example, how much has The Documentary Channel spent on commissioning and acquiring independent productions in each year of the current licence term in terms of both dollars and hours?

LISTNUM 1 \l 16131             How much programming has the CBC's main network and Newsworld provided to The Documentary Channel?

LISTNUM 1 \l 16132             What is the precise breakout between in‑house related party and arm's length independent productions?


LISTNUM 1 \l 16133             Over the past couple of years there has been a marked decrease in the documentary programming strands available to independent producers on the main English‑language CBC television network.  Our written intervention cited specific examples.

LISTNUM 1 \l 16134             Our research indicates that the availability of Canadian long‑form documentary programming on the CBC English network has declined from a recent peak of 263 hours in 2003/04 to just 122 hours in 2005/06.

LISTNUM 1 \l 16135             It appears to us that the CBC's strategy is to reduce the exhibition windows for documentary programming on the main network.  We note that programming on The Documentary Channel is a available to fewer than 10 percent of the households with access to programming on the main network or Newsworld.

LISTNUM 1 \l 16136             Without clear guidance from the CBC, we are concerned that a continuation of the trend to reduce viewing opportunities for documentary programming on the more mature programming services will result in a serious reduction of diversity in terms of the documentary programming that is available to the largest number of Canadians.


LISTNUM 1 \l 16137             To alleviate these concerns, the CFTPA seeks precise answers as to how the CBC intends to allocate documentary expenditures between acquisitions, in‑house production and independent production, on the main network, Newsworld and The Documentary Channel.

LISTNUM 1 \l 16138             Mario.

LISTNUM 1 \l 16139             MR. MOTA:  Thank you, Stephen.

LISTNUM 1 \l 16140             The CFTPA has serious concerns about the lack of transparency surrounding the valuation of Corus' interest in The Documentary Channel.  We believe the $1 million sale price is too low and does not represent fair market value.  We note that a recent transaction involving a similar ownership stake in the Category 1 digital specialty service, the Biography Channel, was valued at $5 million.  The Biography Channel and The Documentary Channel have similar subscriber numbers, revenue and PBIT levels.

LISTNUM 1 \l 16141             Back in 2002 the CBC paid $1.2 million to acquire a 70 percent voting interest in the Category 1 digital specialty service "Country Canada", and committed tangible benefits consisting of new programming initiatives for the service amounting to 35 percent of the value of the transaction.

LISTNUM 1 \l 16142             We believe there is a serious disconnect between the value assigned to The Documentary Channel and these and other transactions.


LISTNUM 1 \l 16143             Further, CFTPA recommends that, consistent with CRTC practice, The Documentary Channel's debt should be included in the value of the transaction for the purpose of assessing benefits.

LISTNUM 1 \l 16144             Given our concerns about inadequate valuation of this transaction, the CFTPA believes that a tangible benefit totalling $100,000 is insufficient.

LISTNUM 1 \l 16145             Further, the specific benefit proposed is inconsistent with the CRTC's expectation that a majority of benefits in television transactions be allocated to "on‑screen presence".

LISTNUM 1 \l 16146             The CFTPA fails to see how the proposed $20,000 annual award, which would represent less than 10 percent of the $216,000 average Canadian documentary budget, is:

"... sufficient to be the first cornerstone of a project's financing or the piece that makes an underfinanced project a reality..."  (As read)

LISTNUM 1 \l 16147             As the CBC claims.

LISTNUM 1 \l 16148             We urge the Commission to ensure that a proper value is assigned to this transaction and that appropriate benefits are pledged.

LISTNUM 1 \l 16149             Guy.


LISTNUM 1 \l 16150             MR. MAYSON:  Thanks, Mario.

LISTNUM 1 \l 16151             In renewing the licences for CBC English‑language television in the year 2000, the CRTC stated that:

"The CBC should be a model for others in respect of its dealings with independent producers.  It's plans should be transparent in order to foster collaboration with the independent production industry."  (As read)

LISTNUM 1 \l 16152             The CFTPA agrees.

LISTNUM 1 \l 16153             The CFTPA has long advocated that Terms of Trade Agreements are one of the best means of addressing some of these issues and in establishing a clear framework for negotiation in the contractual arrangements between independent producers and broadcasters, including the CBC.

LISTNUM 1 \l 16154             The CFTPA entered into its first Terms of Trade agreement with the CBC in September 2002.  The Independent Production Protocol has been useful for standardizing internal CBC television practices and licensing and commissioning programming from independent producers.


LISTNUM 1 \l 16155             We have found, however, that it has been not been as effective an instrument for negotiating fair and equitable individual contracts in a rapidly changing broadcasting and communications environment.  The amalgamation of rights for the main CBC network and its specialty channels without separate or increased licence fees is a serious concern to independent documentary producers.  We remain concerned that the CBC intends to licence documentaries from independent producers for broadcast on multiple CBC broadcast platforms without adequate compensation.

LISTNUM 1 \l 16156             We have recommended that the Commission require the CBC to maintain separate programming executives and commissioning editors for The Documentary Channel and the CBCs other television assets.  It is vital that The Documentary Channel maintain an approach to documentary programming that is unique from the CBC's other television services in order to ensure diversity in the system.

LISTNUM 1 \l 16157             I was pleased to hear Mr. Stursberg actually say that this afternoon.  It was very interesting to hear that.


LISTNUM 1 \l 16158             We are very pleased to have had the opportunity to appear before you today to present our views on this important transaction.  Our member companies want this service to succeed and ensure that The Documentary Channel continues to build on the Canadian tradition of excellent documentary programming.

LISTNUM 1 \l 16159             Thank you for your attention.  We would certainly be pleased to answer any questions you may have.

LISTNUM 1 \l 16160             THE CHAIRPERSON:  Thank you, gentlemen.

LISTNUM 1 \l 16161             Commissioner Cram...?

LISTNUM 1 \l 16162             COMMISSIONER CRAM:  Thank you.

LISTNUM 1 \l 16163             I wanted to go to page 3 of your presentation today, Mr. Mayson, the third paragraph.  I recognize that we are to examine the commitments and everything else, but as with a lot of other sales and consolidations there is a limit, don't you believe, to how far we can go in between normal commercial transactions between parties?

LISTNUM 1 \l 16164             Is it realistic fundamentally that we would reject a deal made between two willing partners?


LISTNUM 1 \l 16165             MR. MAYSON:  I don't know.  I think, if I understand your question, I think we realized the scope of this discussion is really about a change, a transfer in ownership dealing with the ownership of a certain specialty channel and I think that is obviously the focus of the Commission's work here.

LISTNUM 1 \l 16166             Our only point, I think in some of the issues that we have raised, is that other aspects particularly in a consolidating world other aspects of some of the properties owned by the same owners, it's relevant, I think, to look at the larger picture and make some connections where it's appropriate.

LISTNUM 1 \l 16167             MR. MOTA:  Commissioner Cram, if I could just ‑‑

LISTNUM 1 \l 16168             COMMISSIONER CRAM:  But you see our choices are to say yes or no and the only time I recall us ever saying no was in the early '90s, to my now colleague Commissioner Williams, and that's ‑‑ I mean my recollection is fairly good, so I guess I'm just wondering, you know.

LISTNUM 1 \l 16169             I'm sorry, please go ahead.

LISTNUM 1 \l 16170             MR. MAYSON:  Go ahead, Mario.


LISTNUM 1 \l 16171             MR. MOTA:  Commissioner Cram, we are not asking the Commission to deny this transaction.  What the Commission has done in the past is required a sufficient level of benefits that is commensurate with the transaction.  We certainly wouldn't expect the Commission to force the CBC to pay more in the transaction, but it could certainly set the bar higher in terms of the benefits that have been proposed.  If it's $100,000, perhaps it can be two or three or four, whatever the Commission deems is appropriate.  But there is certainly precedent there where the Commission has required a greater level of benefits and that is one of the issues that we have raised that we think the Commission should look at.

LISTNUM 1 \l 16172             COMMISSIONER CRAM:  On page 5 you talk about:

"... the CBC's strategy is to reduce the exhibition windows for documentary programming on the main network.  We note that ..."

LISTNUM 1 \l 16173             And then you say that programming is available to fewer people.

LISTNUM 1 \l 16174             But at the end of the day that could also be seen as a smart move, develop the taste on the main network and then sell them on The Documentary Channel.

LISTNUM 1 \l 16175             I mean, it seems to me that that could be seen as a fairly smart strategy.


LISTNUM 1 \l 16176             MR. MAYSON:  I think our point there ‑‑ I mean was actually very gratified to hear the CBC's comments and their presentation because I think they are clearly looking at a separate programming strand for The Documentary Channel.  In our own submission we talk about, I think, a separate programming budget, separate programming executives.

LISTNUM 1 \l 16177             I think we absolutely are on the same wavelength and seeing the value of The Documentary Channel as being distinct from the main network.  And I'm pleased.

LISTNUM 1 \l 16178             I think the problem in the past has been a lack of clarity in that area and I think that this transaction, the debate around the transaction that I think this transaction has provoked in the documentary community, I think it's touched a nerve and I think it's interesting that the CBC has responded well in that regard.

LISTNUM 1 \l 16179             COMMISSIONER CRAM:  Mr. Mota, I wanted to move on to you.

LISTNUM 1 \l 16180             What is the PBIT of the Biography Channel.

LISTNUM 1 \l 16181             Do you know?

LISTNUM 1 \l 16182             MR. MOTA:  You are catching me on the spot.  I don't have that number here.


LISTNUM 1 \l 16183             We were using the 2005 data that the Commission ‑‑ that is the last year of data that is publicly available for all the specialty channels, and certainly we were comparing those levels together.  Unfortunately, I don't have the specific number, but it's all Commission data from the statistical and financial summaries and they are all generally in the same area.

LISTNUM 1 \l 16184             COMMISSIONER CRAM:  Wouldn't it make sense that CBC would pay $1.2 million because they were acquiring ‑‑ in Country Canada, because they were acquiring a larger interest?

LISTNUM 1 \l 16185             MR. MOTA:  Certainly.  But the point there I guess would be this is a channel that had just launched and presumably had greater losses in the early going.

LISTNUM 1 \l 16186             So in the sense of The Documentary Channel, they have had six years at it, we think they are going to turn profitable within the next year ‑‑ if they haven't already because the 2006 data is not out yet.  So the comparison there is that this was a service that had just launched in a very uncertain environment and yet it did pay even more for it at the time.  So six years later, would that have been $2, $3, $4 million?  I would suspect it would be a lot higher.


LISTNUM 1 \l 16187             So the point of comparison is there that that was a service that had just launched and was forecasting significant losses over the first start‑up years as any digital specialty service had projected as well.

LISTNUM 1 \l 16188             COMMISSIONER CRAM:  Don't you think it is relevant in terms of Commission concerns about the integrity of the licensing process that they would do something to sweeten the deal in year one of a licence if they wanted to acquire the totality of a licence?

LISTNUM 1 \l 16189             MR. MOTA:  I think that may have been one of their considerations, but certainly I wasn't part of that transaction.  I couldn't speak for them and knowing exactly what the thinking was in terms of ‑‑

LISTNUM 1 \l 16190             COMMISSIONER CRAM:  Yes.  And you are fully aware of how we don't particularly like people after year one transferring a licence.

LISTNUM 1 \l 16191             MR. MOTA:  I certainly am aware of that.

LISTNUM 1 \l 16192             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 16193             Now, further down you say:

".. debt should be included in the value of the transaction ..."


LISTNUM 1 \l 16194             I see that when the purchaser is acquiring the debt.  I don't see it when the seller is acquiring the debt, because all I see is really a negative $15 million value to the service.

LISTNUM 1 \l 16195             MR. MAYSON:  I mean, if there is a question there ‑‑ I think our own sense of that is it was an interesting discussion on the questioning of the ‑‑ was interesting before hand.

LISTNUM 1 \l 16196             I think we understand the issue better in terms of the debt being forgiven, in a sense, by Corus before the transaction actually took place, but it seems to me ‑‑ I think we still ‑‑ personally, as an Association, I think we support the concept of debt being factored into the value of a transaction.

LISTNUM 1 \l 16197             COMMISSIONER CRAM:  How would it be?  How would it be here?

LISTNUM 1 \l 16198             MR. MAYSON:  In this case though, if I'm understanding your question properly, I think by forgiving the debt, in our view, there has been sort of an undervaluing of the actual value of the transaction.

LISTNUM 1 \l 16199             Is $1 million a fair price at that point?  It seems that there is a bit of a disconnect between the real value and what was actually paid for it in the transaction.


LISTNUM 1 \l 16200             COMMISSIONER CRAM:  I'm sorry.  The seller is netting out negative $15 million.  How else can I look at that value?  They have $16 million in debt, they are being paid $1 million, so they are therefore paying $15 million to get rid of this.

LISTNUM 1 \l 16201             So how do I factor that debt in any other way other than that?

LISTNUM 1 \l 16202             MR. MAYSON:  I will let Mr. Ellis comment, too, but the point to us, though, it seems is that especially with a related or partnership transaction it is very easily ‑‑ the real value of the transaction may actually be undervalued and the benefits could ultimately be undervalued as well.

LISTNUM 1 \l 16203             I found Mr. Maavara's comments interesting that he had other offers for additional dollars for the property.  So we are not necessarily saying its $16 million.

LISTNUM 1 \l 16204             I think in principal debt is ‑‑ and I think the precedent through the Commission debt has been established as being normally part of the transaction, the difference being here whether it was assumed or not.  I understand that.

LISTNUM 1 \l 16205             COMMISSIONER CRAM:  Yes, like it belongs to the seller now.  It doesn't belong to the buyer.


LISTNUM 1 \l 16206             I'm sorry, I just still don't understand the argument of any other way that we could factor that debt into this.

LISTNUM 1 \l 16207             MR. MAYSON:  Have a crack at it.

LISTNUM 1 \l 16208             MR. ELLIS:  If I could explore that a little bit.  I mean we are obviously at this table representing the interests of a number of documentary producers in Canada who typically operate within a system where the broadcasters contribute I think statistically about a quarter of the cost of making a documentary and historically in at least the last 10 years a lot that the funding for documentaries and the improvement in the spending on documentaries has come about largely through public benefits levied by the Commission on the consolidation and merger and acquisition of change of control of various organizations.

LISTNUM 1 \l 16209             So it doesn't surprise us that parties would come to this table ‑‑ not exclusively Corus and the CBC but others that have come before them in recent history ‑‑ and organize their affairs in such a way as to minimize the valuation so that the benefit which might be seen by those parties as a tax on them, would be reduced.


LISTNUM 1 \l 16210             So from where the producers sit you are absolutely right that technically there isn't $16 million changing hands from the purchaser to the seller, but conceptually, clearly ‑‑ it's clear in our minds that the $1 million valuation has been set, to some extent, in such a way as to reduce the benefit that might otherwise flow to the independent sector and we are simply trying to draw attention to that.  As to what it would be is open to question.  I mean Canada, you know, has ‑‑

LISTNUM 1 \l 16211             COMMISSIONER CRAM:  Wait, wait, wait.  Excuse me.

LISTNUM 1 \l 16212             You say we have reason to be suspicious and now I'm going to ask you why we have reason to be suspicious.

LISTNUM 1 \l 16213             MR. MAYSON:  I certainly didn't use the word "suspicious".

LISTNUM 1 \l 16214             COMMISSIONER CRAM:  I know, but you said in the past people who would manage their affairs so as to avoid paying the benefits.

LISTNUM 1 \l 16215             So you are saying we should be cautious.

LISTNUM 1 \l 16216             MR. ELLIS:  Well, yes.  "Cautious" is the word I would use.


LISTNUM 1 \l 16217             When I referred to recent history, I mean, there was a policy hearing ‑‑ and I don't think the decision is out on that at this point ‑‑ last fall in which this Association intervened and proposed a new way in which benefits be calculated, partly in response to some transactions in which huge amounts of technicalities were brought forth.

LISTNUM 1 \l 16218             The way we see it, there should be a benefit to the industry.  Historically, that is the way it has being done.  It is fairly discretionary on the Commission's part as to how those dollar amounts have been arrived at.  I mean, even the 10 percent is technically a floor, but we don't see people rushing to offer 11 percent.

LISTNUM 1 \l 16219             I mean, it's natural that the parties would only offer the minimum that they might be required to do.  I was going to say that you know, it strikes me as similar to, you know, Canada selling a nuclear reactor to another country and then loaning them the money to pay for it and then forgiving the loan.  I mean, so how do you interpret those transactions.

LISTNUM 1 \l 16220             The benefit is clearly there and clearly the fair market value is higher and that the industry should benefit more significantly is I guess what we are saying.

LISTNUM 1 \l 16221             COMMISSIONER CRAM:  Would you, Mr. Ellis, have paid more than that for a company that has consistently lost money and has no hard assets?


LISTNUM 1 \l 16222             MR. ELLIS:  Well, assuming I had the resources, to my way of thinking this is about real estate.  The Documentary Channel is beachfront real estate in a world which is rapidly transitioning to one in which everybody is received digitally.

LISTNUM 1 \l 16223             So while, as we pointed out, today 10 percent of Canadian households have access to The Documentary Channel, or choose to have access to it, tomorrow they will all be in the same boat.  CBC main network will be right alongside The Documentary Channel freely available to everyone.

LISTNUM 1 \l 16224             So in terms of the opportunity to hold a franchise in this space, I think it's an amazing opportunity.  And the ability of any interest, whether they be private or public ‑‑ I mean the opportunity obviously for the public broadcaster to get in on this at $1 million bucks is absolutely amazing.  It is a huge, a huge ‑‑ you know, certainly something ‑‑ I would reach for my chequebook to beat $1 million bucks, if I had it.

LISTNUM 1 \l 16225             MR. MAYSON:  I would only add to that, too, that I think when you look at the revenue numbers they are steadily increasing and a move towards profitability within a year, I think things like that have to be taken into account here.


LISTNUM 1 \l 16226             COMMISSIONER CRAM:  Thank you.

‑‑‑ Pause

LISTNUM 1 \l 16227             COMMISSIONER CRAM:  That's it.

LISTNUM 1 \l 16228             THE CHAIRPERSON:  Thank you very much, gentlemen, for your intervention.

LISTNUM 1 \l 16229             Madam Secretary...?

LISTNUM 1 \l 16230             MR. MAYSON:  Thank you.

LISTNUM 1 \l 16231             THE SECRETARY:  I would now ask The Documentary Organization of Canada to appear and present its intervention.

‑‑‑ Pause

LISTNUM 1 \l 16232             THE SECRETARY:  Please introduce yourself and you have 10 minutes for your presentation.

LISTNUM 1 \l 16233             Thank you.

INTERVENTION

LISTNUM 1 \l 16234             MR. McMAHON:  Thank you.

LISTNUM 1 \l 16235             Mesdames et messieurs du conseil, Commissioners, thank you for inviting us to present our position on the proposed transfer of the ownership of the Canadian Documentary Channel partnership from Corus Entertainment to the CBC.

LISTNUM 1 \l 16236             Merci de nous inviter à présenter notre position sur le transfert de la propriété proposée du The Documentary Channel.


LISTNUM 1 \l 16237             My name is Michael McMahon and I am here today to represent the Documentary Organization of Canada, a national, bilingual professional arts organization representing 700 independent documentary film‑makers across Canada.  I have been a DOC member for 10 years and I am serving currently as a National Board Member and Co‑Chair of the Toronto chapter.

LISTNUM 1 \l 16238             For the past 17 years I have owned and operated Primitive Entertainment, a production company based in Toronto specializing in feature documentaries and documentary series.  Primitive Entertainment currently employs around 40 people full time and under contract, and our work is the subject of a major retrospective at this years' Hot Docs Film Festival.

LISTNUM 1 \l 16239             With me here today to represent DOC are Peter Wintonick, to my left over there; Sylvie Van Brabant and Danijel Margetic.

LISTNUM 1 \l 16240             Peter is the winner of the 2006 Governor General's Award in Visual and Media Arts.  He is a prolific award‑winning film‑maker and one of Canada's best‑known international documentarians.

LISTNUM 1 \l 16241             Sylvie it has been making point of view documentaries in Québec for 22 years, and her latest production "A Force de reves" recently won the Jutra award for Best Feature documentary.


LISTNUM 1 \l 16242             Danijel is an emerging film‑maker, currently completing his second broadcast documentary and he represents the new generation of DOC members.

LISTNUM 1 \l 16243             Peter...?

LISTNUM 1 \l 16244             MR. WINTONICK:  Thank you, Michael.

LISTNUM 1 \l 16245             Independent documentary film‑makers and producers like our preceding colleagues often find themselves performing an unenviable balancing act.  We strive for our own creative expression, while providing an invaluable public service by holding up a mirror to the realities of Canadian society.

LISTNUM 1 \l 16246             At the same time, we have to weigh our artistic and civic goals against the realities of managing an independent business in an industry which has increasingly kind of declining and limited resources.

LISTNUM 1 \l 16247             The Documentary Organization represents 700 such documentarians from all corners of Canada and The Documentary Channel is of great importance to each and every one of us.


LISTNUM 1 \l 16248             MS VAN BRABANT:  We cannot support this application for the purchase of The Documentary Channel in its current form.  We have stated our position in our written submission and shared our concerns with the CBC, but to this date none of the concerns regarding the loss of diversity or lack of mechanisms to protect the interests of independent documentary producers have been addressed.

LISTNUM 1 \l 16249             MR. McMAHON:  We are deeply troubled by the lack of transparency surrounding this transaction, particularly around the issues of the valuations of The Documentary Channel and the proposed benefits package.

LISTNUM 1 \l 16250             Peter...?

LISTNUM 1 \l 16251             MR. WINTONICK:  We strongly believe that the stated value of the transaction of $1 million is arbitrarily low and does not represent the fair market value of The Documentary Channel.  If I had a chequebook I would give you $1 million bucks for it, or maybe we will collect a bit of money from our colleagues and we would like to make an offer.  But that's kind of a dream.

LISTNUM 1 \l 16252             The DOC agrees with Corus' description of the $1 million purchase figure as nominal.  We would like to stress that benefits packages should not be determined based on nominal values, but rather on the estimates of real value of the transaction.


LISTNUM 1 \l 16253             DOC feels that if the Commission were to use nominal values in determining appropriateness of a benefits package, it would set the a dangerous precedent which would allow other media owners to undervalue their purchases in order to avoid or decrease the payment of benefits.

LISTNUM 1 \l 16254             In their response, Corus has raised the question of whether adding the cost of an increased benefits package to a breakeven service would truly be in the public interest.

LISTNUM 1 \l 16255             CBC has made it public that it intends to turn around The Documentary Channel within, I guess year seven, in one to two years.  In that case, the service will no longer be breakeven.  A more comprehensive benefits package which includes additional licensing funds would certainly lead to an increase in number of stories about Canadians, produced and directed by Canadians.  We believe that this would truly be in the public interest.


LISTNUM 1 \l 16256             MR. MARGETIC:  DOC is increasingly concerned about cross‑platform licensing, or what we call "forced tied sales", which is another way of saying one licence spread over all of a broadcaster's channels and assets.  Despite many requests to CBC regarding forced tied sales, DOC has not received assurances that this won't happen with The Documentary Channel.  CBC has said that the they will deal with this issue on a case‑by‑case basis.

LISTNUM 1 \l 16257             We are concerned that without specific licensing requirements or thresholds, there are no safeguards in place to protect independent producers from the overwhelming weight that broadcasters can exert in negotiations.

LISTNUM 1 \l 16258             DOC would like to see included in the conditions of licence a commitment that under CBC stewardship The Documentary Channel will commission a minimum of 26 hours of prime time one‑hour documentaries and an additional five feature documentaries, with no requirement for cross‑platform licensing.

LISTNUM 1 \l 16259             MR. WINTONICK:  Over the last five years The Documentary Channel has established itself as an important venue for independently produced Canadian feature length documentaries, despite the fact that the conditions of licence for The Documentary Channel do not specifically require programming of feature length documentaries.  These independently produced documentaries have achieved both critical and box office success, but have no comparable source of funding or exhibition venue in the Canadian broadcast market, including the national public broadcaster.


LISTNUM 1 \l 16260             To date, CBC has not agreed to maintain the current level of feature length programs subsequent to the purchase.  Therefore, should the Commission decided to issue a licence to the applicant, we recommend that the conditions of licence include prime time programming of newly commissioned and acquired independent feature length documentaries.  We believe that waiting until the next licence renewal would jeopardize this important element of Canada's cultural landscape.

LISTNUM 1 \l 16261             MR. McMAHON:  CBC has been increasing its interest in reality or, in their terms, factual entertainment programming.  To further complicate the matters, CBC has indicated that in their view documentaries and factual entertainment share some of the same attributes.  As CBC has neglected to explain what these similar attributes are, DOC is concerned that this attitude will result in inevitable replacement of documentaries by reality programming.


LISTNUM 1 \l 16262             Documentaries are intended to educate, enlighten, inspire, surprise, as well as entertain.  They allow us to discover truths about ourselves and our society.  The sad reality of reality programming is that it is cheap to produce in relation to other types of programming.  Consequently, we fear that high‑quality documentary programming will be displaced by factual entertainment.

LISTNUM 1 \l 16263             Thus, we urge the Commission to ensure that factual entertainment, i.e., Category 11 programming is not included as part of the programming on The Documentary Channel.

LISTNUM 1 \l 16264             Although this has not been determined at this date, there is a distinct possibility that the CTF envelope previously awarded to The Documentary Channel will stay with Corus if the sale goes forward.  This would result in a nearly $300,000 loss to the commissioning budget of the channel.  DOC is concerned that this decrease in available CTF funds will lead CBC to increase the presence of in‑house programming on The Documentary Channel.

LISTNUM 1 \l 16265             The current conditions of licence allow for up to 75 percent of all programs broadcast to be produced in‑house.  To this date, in‑house programming on The Documentary Channel has been non‑existent due to a lack of in‑house resources.  Consequently, independent producers have enjoyed greater access to on‑air exposure and licensing funds.


LISTNUM 1 \l 16266             DOC feels that without safeguards in place, independent documentary producers will be forced to compete with CBC's formidable in‑house production team for limited funds and programming real estate.

LISTNUM 1 \l 16267             As we have received no assurances from the CBC to the contrary, we would like a condition of licence to be included which would prohibit any additional in‑house programming, aside from existing output deals with the CBC, on The Documentary Channel.  Waiting until the next licence renewal to implement this condition would unduly disadvantaged the independent documentary producers.

LISTNUM 1 \l 16268             MS VAN BRABANT:  CBC a fait des consultations auprès des producteurs indépendants, mais suite à une de nos requêtes, CBC a refusé de considérer un point crucial : l'indépendance créatrice et administrative du DOC Channel.  De plus, des informations semblent nous indiquer que Kirsten Layfield, le directeur de la programmation à CBC, aura une emprise directe sur les décisions concernant la programmation de DOC Channel.


LISTNUM 1 \l 16269             Nous croyons qu'à moins que l'administration et les directeurs de la programmation de DOC Channel puissent jouir d'une liberté créatrice et d'une indépendance de contenu, nous risquons d'assister à une diminution de la diversité des productions documentaires et à une disparition déplorable d'une diversité de points de vue d'auteurs sur des sujets d'intérêts pour tous les Canadiens.

LISTNUM 1 \l 16270             Canada is a wonderfully multicultural, multiracial, multifaceted nation of immigrants and aboriginal people who have chosen to live together in this beautiful northern land.  Documentaries created by our members reflect our rich diversity of thought and landscape.  However, we are deeply concerned that this multiplicity of visions and variety of voices is not adequately reflected in the range of films and TV programs broadcast on our national TV networks.

LISTNUM 1 \l 16271             L'acquisition de Documentary Channel par CBC aggrave notre inquiétude et accentue une tendance déjà alarmante à la concentration des médias de diffusion.  Voyons‑le comme une autre porte qui se ferme au nez des créateurs aux idées nouvelles, ou comme une autre oreille qui devient sourde aux propositions des cinéastes.  C'est, finalement, un autre écran qui n'est plus disponible pour la diffusion de la diversité de pensée et de culture du Canada.  Tout cela risque de nuire grandement à l'évolution culturelle de notre jeune pays.


LISTNUM 1 \l 16272             Pour ces raisons, et à cause des autres problèmes signalés dans notre proposition, nous ne pouvons pas appuyer cette demande telle que déposée.  Nous pourrions par contre appuyer une requête qui tienne compte des recommandations de DOC et des autres intervenants.

LISTNUM 1 \l 16273             Nous remercions la Commission de nous avoir fourni l'occasion d'exprimer nos inquiétudes et de formuler nos recommandations.  S'il y a lieu, il nous fera plaisir de répondre à toutes vos questions.

LISTNUM 1 \l 16274             Merci.

LISTNUM 1 \l 16275             THE CHAIRPERSON:  Commissioner del Val...?

LISTNUM 1 \l 16276             COMMISSIONER del VAL:  Thank you for your intervention.

LISTNUM 1 \l 16277             I note that this document from which you just read must have been prepared prior to your hearing the CBC's presentation just earlier.

LISTNUM 1 \l 16278             I am wonder, after having heard what CBC had to say, and Corus had to say, can any of the concerns in this document that you just read from be taken off the table now?

LISTNUM 1 \l 16279             MR. McMAHON:  Yes.  I think Mr. Stursberg's commitments to maintain the level of funding for The Documentary Channel is welcome and admirable.


LISTNUM 1 \l 16280             The current CTF envelope, for example, is about $288,000.  We believe The Documentary Channel has actually spent more than that in commissioning Canadian documentaries.

LISTNUM 1 \l 16281             Obviously we would be happy to see a hard number attached to that of some of the substantial CTF funds received by the CBC on an annual basis specifically for documentaries and, most importantly, feature length documentaries.  As The Documentary Channel came on line six years ago, it became for us a very exciting proposition that there was a venue that was servicing this woefully under served genre which we excel at as Canadian film‑makers and we would like to see a substantive level of funding commitment to that genre and to that form on The Documentary Channel that is not licensed across many channels ‑‑ or the other broadcast assets owned by the CBC.

LISTNUM 1 \l 16282             MR. MARGETIC:  If I may...?

LISTNUM 1 \l 16283             COMMISSIONER del VAL:  Sorry.  Of course.

LISTNUM 1 \l 16284             MR. MARGETIC:  If I may, it depends on what number we are actually talking about, since we haven't heard a hard number, as Michael has said, and including the fact that between 2005 and 2006 there was a sharp increase in the amount of funds that The Documentary Channel has expended on independently produced programming.


LISTNUM 1 \l 16285             In 2005 they have dipped into their CTF funding to the extent I believe of close to $300,000, while in 2006 that figure had nearly doubled, or practically doubled to $600,000.  So if they were talking about maintaining the level of spending that was existent in 2006, we would welcome Mr. Sturberg's commitment.

LISTNUM 1 \l 16286             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 16287             So aside from that one area where you see perhaps your concern having been somewhat allayed ‑‑ but not completely, I acknowledge that ‑‑ every one of your other concerns remain the same.

LISTNUM 1 \l 16288             Should I conclude that?

LISTNUM 1 \l 16289             MR. McMAHON:  Yes.

LISTNUM 1 \l 16290             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 16291             I have read your intervention, listened to you today, I have also read the replies that the applicants have made.  At some point the parties may just have to agree that they disagree and that there may not be a way to resolve all of your concerns.

LISTNUM 1 \l 16292             On the value of the transaction I hope you have also had an opportunity to hear CFTP ‑‑

LISTNUM 1 \l 16293             MR. McMAHON:  We did.  Yes, indeed.

LISTNUM 1 \l 16294             COMMISSIONER del VAL:  All right.


LISTNUM 1 \l 16295             Do you have anything more to add to what they had to say about how we should look at that debt of $15.2 million having been forgiven?

LISTNUM 1 \l 16296             MR. McMAHON:  I think the value of the channel at $1 million seems to us to be quite low ‑‑ that is a given ‑‑ and that the benefits package of 10 percent being based on that valuation, $100,000 over five years, it is actually ‑‑ in terms of I think what concerns our members is not so much the usefulness of the benefits package going forward, because actually very few films are going to get made with that kind of money.

LISTNUM 1 \l 16297             I think what we are concerned with is that it sets a dangerous precedent, not only now but for future transactions that this Commission may examine and how these transactions are valued.  We also take into account with the similar transaction with Country Canada where a benefits package of $425,000 was offered and was well above the 10 percent of the acquisition price.

LISTNUM 1 \l 16298             So, you know, in terms of what more we can add, we just don't think it is a fair valuation.  You know, we just don't think so.

LISTNUM 1 \l 16299             COMMISSIONER del VAL:  I think valuation is very much of an art more than a science.


LISTNUM 1 \l 16300             You know, I have to admit that when I first read your intervention I had difficulty understanding the logic of adding the debt under these circumstances to the value and therefore arriving at $16 million, I read the replies, which appeared to me was a more conventional way of rationalizing the valuation, I have listened to the parties today, and I cannot come around to how you want us to look at the debt.  You know, I think in black and white it's a large liability.

LISTNUM 1 \l 16301             So I just want to give you a final chance, you know, if you think I have missed a way of looking at it.

LISTNUM 1 \l 16302             MR. McMAHON:  I appreciate the chance.  Thank you.

LISTNUM 1 \l 16303             I guess, as Mr. Ellis said, this is about real estate and it is, for us, primarily about diversity and competition in the marketplace.  We see that being diminished by this transaction.

LISTNUM 1 \l 16304             So one of the things we are trying to draw attention to is how they have valued the channel and what is going to be in the public interest and the interest of the community at large.


LISTNUM 1 \l 16305             If the Commission chooses to accept that the debt is written off, and therefore the true value of the transaction is $1 million, then so be it.

LISTNUM 1 \l 16306             We feel that something more in the order of $300,000 to $500,000 as a benefit package would be more appropriate, given the value of the way we see the value in our minds of what this transaction is.

LISTNUM 1 \l 16307             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 16308             You know, the public interest aspect, I don't know whether you heard Mr. Maavara's reply, there is also the public interest that we have to take into account, that then the public corporation was not burdened by the debt which, you know, is funded by public purse.  That is another perspective.

LISTNUM 1 \l 16309             MR. MARGETIC:  I believe we were made to believe that the CBC has made it public that they were dipping into funds for purchase of the channel that weren't tied to the public purse.  So they have made that publicly open.

LISTNUM 1 \l 16310             COMMISSIONER del VAL:  Those are my questions.

LISTNUM 1 \l 16311             Thank you very much.

LISTNUM 1 \l 16312             MR. McMAHON:  Thank you.

LISTNUM 1 \l 16313             COMMISSIONER del VAL:  Thank you, Madam Chair.


LISTNUM 1 \l 16314             THE CHAIRPERSON:  Vice Chairman French...?

LISTNUM 1 \l 16315             COMMISSIONER FRENCH:  In effect, it seems to me, and you will tell me if I'm wrong, what you are saying to us is that Corus has invested a significant amount of money in a channel, it is being purchased as a going concern, and in your mind the debt is somehow a proxy for some residual value as above and beyond the $1 million that is being transferred to CBC in this transaction.  However, you are not too sure about what proportion of that $15 million ought to be considered as part of the value of the transaction.

LISTNUM 1 \l 16316             Is that a fair way of stating your argument?

LISTNUM 1 \l 16317             MR. McMAHON:  Yes, okay.  Yes.

LISTNUM 1 \l 16318             COMMISSIONER FRENCH:  I guess what I am searching for is:  What would Corus' incentive for accepting less than market value in fact be?

LISTNUM 1 \l 16319             I mean, they are retaining all the debt.  You claim the asset they are transferring is worth more than $1 million, which is a claim that is a fair claim, but what we don't have is an explanation of why Corus would want to alienate this asset that it is in a reasonably good position to judge the value of for less than what you claim to be the value.


LISTNUM 1 \l 16320             MR. MARGETIC:  I must say that the reason why we are so strong in our opinion that the valuation is less than what we believe is because we equally do not understand why a private corporation would divest itself of its property at a loss.

LISTNUM 1 \l 16321             COMMISSIONER FRENCH:  But, Mr. Margetic, you are leaving us with a mystery and I am inviting you to help us try to solve the mystery.  I confess that ‑‑ let's suppose that I accepted the basic premise that this was beachfront property and that CBC was running away with in an enormous bargain, what kinds of considerations would you suggest to us?

LISTNUM 1 \l 16322             Should we consider 25 percent of the debt as a baseline, or should we simply say that in a transfer of an asset of this nature benefits should never be less than some absolute amount of money?

LISTNUM 1 \l 16323             Help us a little, because just inviting us to solve a conundrum which you have been unable to solve yourself is perhaps not completely helpful.

LISTNUM 1 \l 16324             MR. McMAHON:  Perhaps the Commission could consider the transfer of Country Canada as similar in terms of the percentage that was offered at that time for the benefits package when examining this particular transaction.


LISTNUM 1 \l 16325             I think we are dwelling quite a lot on the issue of valuation when I think the substantive issues to the community at large are about competition in the marketplace and diversity of choice for producers.  This is merely one issue in this transaction that has caused us some concern, but the larger issues are diversity in the marketplace, choices for producers to sell their products, competition and the issues around surrounding in‑house production on The Documentary Channel going forward.  So these other issues are significant as well to us.

LISTNUM 1 \l 16326             COMMISSIONER FRENCH:  Well, if I take that intervention to mean that we have put the valuation issue to bed in your minds, I guess we will retain that your view is that we should try to consider other comparables and see whether this particular transaction is, in our eyes, an outlier, as you claim, or whether in fact it can reasonably be accommodated within the existing precedents in the marketplace.

LISTNUM 1 \l 16327             Is that your final word on the value of the transaction?

LISTNUM 1 \l 16328             MR. McMAHON:  Yes.  We would ask you to look at earlier precedents of the same nature, yes.

LISTNUM 1 \l 16329             COMMISSIONER FRENCH:  All right.


LISTNUM 1 \l 16330             Now, you are worried about concentration.  In fact, Madam Van Brabant en français engages in some rather extreme language ‑‑ which I am not sure I found entire applicable or appropriate ‑‑ but, in any event, apparently where we would be in approving this transaction sitting passively by while another opportunity is refused to creative people, a deaf ear is turned to their ideas.

LISTNUM 1 \l 16331             What is your solution?  What do you suggest if indeed this represents undue concentration in the market for documentary films in Canada?

LISTNUM 1 \l 16332             MS VAN BRABANT:  Well, we were worried that there would be forced tied sales, that as soon as The Documentary Channel would have it it would also be going towards Newsworld, that it would be crossed.

LISTNUM 1 \l 16333             Now, Mr. Stursberg today seems to be saying that this will not be the case, so we wanted just to be assured about that.

LISTNUM 1 \l 16334             COMMISSIONER FRENCH:  So not withstanding what Mr. Stursberg said, you went ahead and said this and now you are telling us really that is a bit of an exaggeration and that is not really your current position?


LISTNUM 1 \l 16335             MS VAN BRABANT:  We were deeply worried that there would be a loss of diversity because The Documentary Channel has been a great place for documentary film‑makers to air their productions, and it has been successful with regards to critical acclaim, and we just want that to be maintained of course, and we were worried that if it was just one place, with control with regards to commissioning coming from the CBC, that this would create a loss of diversity.

LISTNUM 1 \l 16336             COMMISSIONER FRENCH:  I understand your worries, Madam Van Brabant, but what I'm asking you is:  As a practical matter, beyond expressing your anxieties and your worries to us, what specifically are you suggesting?

LISTNUM 1 \l 16337             Are you suggesting that the Commission attempt, in one way or another, to prevent the CBC from showing documentaries it acquires for The Documentary Channel on other platforms and acquiring the rights to show it on those other platforms?

LISTNUM 1 \l 16338             Is that specifically what you are asking us to do?

LISTNUM 1 \l 16339             MR. MARGETIC:  If I may jump in, no. But we would respectfully request, both from the Commission and the CBC, that the producers are adequately compensated for those productions which cross platforms.


LISTNUM 1 \l 16340             COMMISSIONER FRENCH:  Well, I'm afraid you will have to point to that part of our regulatory armoury which would permit us to do that, Mr. Margetic.  I mean, what is it specifically?

LISTNUM 1 \l 16341             You know, I understand you would like a better deal.  Every time we talk to the producers they want a better deal, they don't like the terms of trade, and I do sympathize and understand that.

LISTNUM 1 \l 16342             We don't regulate the terms of trade, however, so what is it you want us to do?

LISTNUM 1 \l 16343             MR. McMAHON:  We would like to see as a condition of the licence that the money that is spent of commissioning documentaries for The Documentary Channel is for The Documentary Channel per se, that this is not something that we would see our membership losing potential revenue and having to sell to three or four separate outlets for the same licence fee.


LISTNUM 1 \l 16344             This is a major concern to us.  We may not be articulating this as well as we could, but for us we see a venue disappearing and we would like to know that the funding mechanisms that were in place and the types of films that were being produced for that channel will survive this transaction.  We are asking the Commission to help us ensure that this is in fact one of the ‑‑ if the transaction is approved, is one of the conditions of the licence that is issued going forward.

LISTNUM 1 \l 16345             COMMISSIONER FRENCH:  All right.

LISTNUM 1 \l 16346             On the question of the approval of the transaction, if I may with the greatest of respect say, that neither you nor your predecessors, your immediate predecessors, have suggested anything but an approval of the transaction.  That is all you have suggested.  You haven't suggested anything else.  So clearly you are leaving us ‑‑ you are telling us what conditions you would like us to apply to the approval of the transaction.  You have no other suggestions.

LISTNUM 1 \l 16347             MR. McMAHON:  I'm sorry, I don't ‑‑ could you restate that, please?

LISTNUM 1 \l 16348             COMMISSIONER FRENCH:  One of the conditionals in your response, Mr. McMahon, was "if you approve the transaction", and I merely wish to observe to you that neither you, nor the group that appeared before you, Mr. Mayson and his colleagues, suggested that we not approved the transaction.

LISTNUM 1 \l 16349             You don't have another solution.  Neither do we.  I'm just pointing that out to you.

LISTNUM 1 \l 16350             It is not as if we are in some way choosing among a range of alternatives for the future of The Documentary Channel.  There is only one future, as far as we know, nor have you evoked any alternative.


LISTNUM 1 \l 16351             So it is going to be approved, as far as I can tell, since no one has said it should not be approved.  We are just talking about the conditions.

LISTNUM 1 \l 16352             It seems to me then, if we are talking about the conditions ‑‑ this is an observation I make to you, if we are talking about the conditions what you are in effect saying to us, I think ‑‑ let me try and you tell me if I'm wrong ‑‑ we are worried that the CBC becomes, in effect, the sole trustee or owner of this channel.  Under its previous ownership it was more difficult for that channel to try to acquire all of the rights to independent documentaries from independent producers and under the CBC's ownership it will be easier for them, I guess because they have more platforms at their disposition and the purchasing entity will be 100 percent owned by the CBC.

LISTNUM 1 \l 16353             Is that a fair way of expressing your concerns?

LISTNUM 1 \l 16354             MR. McMAHON:  Yes, it is.  And that if you license something to Newsworld it will automatically be licensed for The Documentary Channel, whereas that is a situation that would not have existed in the past.

LISTNUM 1 \l 16355             COMMISSIONER FRENCH:  Under the current.


LISTNUM 1 \l 16356             So what you are in effect saying is:  As independent producers we would be looking to the CRTC to try to be sensitive to and alert to and protective of our freedom to control the rights of our productions and not put us in a sort of monopsonistic situation whereas documentary producers, if we want to go on television there is only one buyer and we have to bow to the exigencies or demands of that one buyer.

LISTNUM 1 \l 16357             Is that what you are saying?

LISTNUM 1 \l 16358             MR. McMAHON:  Yes.

LISTNUM 1 \l 16359             COMMISSIONER FRENCH:  All right.  Fair enough.

LISTNUM 1 \l 16360             It is another matter what instruments we use to do it, but I understand perfectly what you are saying.

LISTNUM 1 \l 16361             I know that my colleague has some questions so I will let her go ahead.  I have a couple of other questions I would like to discuss with you.

LISTNUM 1 \l 16362             Do you want to go ahead.


LISTNUM 1 \l 16363             COMMISSIONER CRAM:  I apologize, Mr. McMahon, for going back to the valuation, however I suggest to you, and every intervenor that is going to be coming to the CRTC in the future, that when you put an assertion in a document before us it may well be that the Commission will be far more stringent that you would provide proof in the future.

LISTNUM 1 \l 16364             So I ask you, and every intervenor, to be very careful of the assertions you make in interventions.

LISTNUM 1 \l 16365             MR. McMAHON:  All right.

LISTNUM 1 \l 16366             COMMISSIONER CRAM:  Mr. Wintonick, I hear you referring to saying you would pay $1 million for this channel.  That's not the point, is it, because you would have to get Corus to keep the debt.  So in order to leave Corus in the same position, it is in their discretion as to whether they eat that debt or not.

LISTNUM 1 \l 16367             So to leave Corus in the same position, because I don't think they are going to be charitable to you as a documentary producer ‑‑ as charitable as they would be to CBC ‑‑ you would have to pay, to get them in the same position, negative $15 million and pay $1 million for it, you would have to pay $16 million.

LISTNUM 1 \l 16368             So would you be willing to pay $16 million?

LISTNUM 1 \l 16369             MR. WINTONICK:  So then $16 million is your evaluation of it?

LISTNUM 1 \l 16370             COMMISSIONER CRAM:  No, I'm saying ‑‑


LISTNUM 1 \l 16371             MR. WINTONICK:  It is the kind of logical question we are getting into here.

LISTNUM 1 \l 16372             For me it is kind of interesting that a public institution is buying a private one, but we will leave that kind of question aside.

LISTNUM 1 \l 16373             I don't know if this was floated in the kind of free market, this transaction.  I mean, it seemed to be a kind of fait accompli to me.  So we don't really know.

LISTNUM 1 \l 16374             There is a statement that it is worth $1 million.  Did you ask them to prove that it is valuated at $1 million?  I didn't hear that, but we will leave that to them.

LISTNUM 1 \l 16375             So it wasn't really offered, we will say, The Documentary Channel, on the free market, so we don't really know what the value is, I would say, as a kind of logical statement.

LISTNUM 1 \l 16376             COMMISSIONER CRAM:  And you think Corus, as a publicly traded company, would be selling under value?

LISTNUM 1 \l 16377             MR. WINTONICK:  No, I'm sure they are responsible to their shareholders in Manhattan.  I'm sure they are.

LISTNUM 1 \l 16378             COMMISSIONER CRAM:  The one issue that I think was a concern in your brief was the CTF envelope going to Corus.


LISTNUM 1 \l 16379             Surely it would follow the licence, wouldn't it?

LISTNUM 1 \l 16380             MR. McMAHON:  We have no idea.  I don't know that anyone does.  It is unclear.  And we have made efforts to understand what would happen in that case and we have spoken to the CTF.  We have not been able to get an answer.

LISTNUM 1 \l 16381             We only draw attention to it because it is a small amount of money, it has a few hundred thousand dollars, not many films get made with that kind of money, but to our community it is significant.  You know, CBC has undertaken today on the record to say they will continue to spend the same amount of money.

LISTNUM 1 \l 16382             We believe more than that has been spent, but technically the envelope is $288,000.  We welcome the commitment to spend money.

LISTNUM 1 \l 16383             What we would like to see is a significant portion of the CBC's CTF envelope going towards documentaries and documentaries specifically for The Documentary Channel.


LISTNUM 1 \l 16384             Just on the whole issue of valuation, with respect, we see $100,000 coming to the community over five years in the form of scholarship held up against the loss of a really interesting venue for our work.  This is part of the reason why we have raised it as an issue, because that is how we measure it in terms of what we are losing over what we are gaining, or what the community is gaining I should say.

LISTNUM 1 \l 16385             COMMISSIONER CRAM:  Yes.  Well, I guess I can suggest to you that other Category 1s have gone black in the past and so I'm not too clear that you are not looking a gift horse in the mouth.

LISTNUM 1 \l 16386             Thank you.

LISTNUM 1 \l 16387             THE CHAIRPERSON:  Vice Chairman French...?

LISTNUM 1 \l 16388             COMMISSIONER FRENCH:  Could I just ask you to help the Commission to understand a little bit why now and not at the point of the renewal of licence for many of the changes?  Because, in effect, what you are saying is:  The transaction has occurred, you have to add a whole bunch of new conditions of licence.

LISTNUM 1 \l 16389             I mean, I guess we could do it but it is not something we do in the normal course.  After all, the buyer has to know what the conditions of licence are in order to make a fair transaction.


LISTNUM 1 \l 16390             I have suggested to you that one of our problems here is that we haven't got a real understanding or a rationale for why Corus should act irrationally and alienate an asset that was worth more than the selling price to them and, beyond that, the Commission isn't in the habit of complicating transactions by adding conditions of licence at the moment of the transaction.

LISTNUM 1 \l 16391             So maybe you could explain why you think now rather than in what would be about two years?

LISTNUM 1 \l 16392             MR. MARGETIC:  There are two reasons, two main reasons why.  Because two conditions ‑‑ there is a condition of licence that hasn't been exercised so far on The Documentary Channel and that is the possibility for up to 75 percent in‑house programming.  That has not been exercised so far due to the fact that The Documentary Channel had no capacity for in‑house programming.

LISTNUM 1 \l 16393             So since the CBC does have that capacity, that would mean that as this transaction goes through independent producers will have to compete with, as we have said, a quite formidable CBC in‑house production team.


LISTNUM 1 \l 16394             The second reason why is feature length documentaries which have not been included in the condition of licence of The Documentary Channel but which The Documentary Channel commissioning editors and managers have undertaken to program and commission on their channel.  These documentaries have had quite a significant critical and financial success in Canada and around the world and they have absolutely no comparable source of financing in the Canadian broadcasting universe, including the national public broadcaster.

LISTNUM 1 \l 16395             I would specifically add that I am referring to independent Canadian feature length docs.  Although the CBC has aired feature length documentaries in recent years, most of them have been either acquisitions, foreign acquisitions, or co‑productions with other foreign broadcasters.

LISTNUM 1 \l 16396             MR. McMAHON:  We also understand that the nature of this transfer requires the Commission to issue a new licence for the balance of the licence term, if I understand that correctly, and that it would be appropriate to ask the Commission to put conditions on that licence for a new controlling partner in the channel.  That is why, yes.

LISTNUM 1 \l 16397             COMMISSIONER FRENCH:  You do understand the complications for a capital market in broadcasting assets where the Commission makes a habit of changing the rules after the original price and terms and conditions have been settled.  I mean, there is a public policy problem there.  You do see it?


LISTNUM 1 \l 16398             I'm sorry Mr. Margetic, you said in effect there is a condition of licence that has never been exercised because there has never been any independent production capacity associated with The Documentary Channel.  But the condition of licence is there and all you are saying to us then is "Please keep it"?

LISTNUM 1 \l 16399             MR. McMAHON:  No.  We would like to ensure that CBC in‑house production is not a feature of The Documentary Channel, is not being produced for The Documentary Channel.

LISTNUM 1 \l 16400             COMMISSIONER FRENCH:  So they will do no in‑house production for The Documentary Channel?

LISTNUM 1 \l 16401             MR. McMAHON:  Yes, that is what we would like.  We would like for the independent community to be producing the programs on The Documentary Channel.

LISTNUM 1 \l 16402             COMMISSIONER FRENCH:  I guess, on the second one, on the feature length independent documentaries, you know, if they were a critical and financial success, why would we have to make it a condition of licence?


LISTNUM 1 \l 16403             MR. MARGETIC:  Primarily because they are generally a financial success for the distributor who distributes them theatrically and, second, because they cost a lot to produce, which potentially we see as being prohibitive in terms of licensing by the CBC.  They may not undertake critical success for fear of losing out on the bottom line.

LISTNUM 1 \l 16404             COMMISSIONER FRENCH:  Well, I thank you very much.  I thank you very much for your point of view.

LISTNUM 1 \l 16405             I retain that we should look at some comparables before we passively sign off on the benefit level.  We should say we don't know what portion of this existing debt ought to be applied to the value, but we could at least ask ourselves in other transactions within the last three or four years of similar broadcasting assets what level of benefits we looked at and that might be a guide for the Commission with respect to the benefits it might require here.

LISTNUM 1 \l 16406             I must say ‑‑ and I hope it will be taken in the spirit in which I offer it, and I'm not speaking specifically of you here because it applies across the board ‑‑ it is disappointing that the level of trust and confidence between producers in both language groups, and principal acquirers of the programming in both language groups, is so low.


LISTNUM 1 \l 16407             It is a troubling phenomenon and I have to say, in all honesty, I'm not sure that the Commission and the Department of Heritage are going to be able to sustain, in the world that we are now going to move into, a degree of detailed control over the nature of those relationships that I think you and other producer groups are seeking.  Even with the best ‑‑ if we wanted to I'm not sure we are going to be able to do it.

LISTNUM 1 \l 16408             I know that means a wrenching change for you, it also, by the way, means a wrenching change for the programmers who are facing other forms of competition, some of it unregulated as they tell us regularly, and I can't help but feel that your ‑‑ not you in particular, but that this problematic is being worked out in detail for specific things like conditions of licence and benefit packages, and so forth, while the world outside is going in an entirely opposite direction and, by the way, the political support for that, I mean partisan political support for that, is eroding.


LISTNUM 1 \l 16409             I don't ask you to have any sympathy for us because I know you have a much more difficult time then people who know where the paycheque is coming at the end of the month, et cetera, so I'm not in any way comparing our situation to those of you who have to live in a real world which is a difficult one, as you pointed out, but it does make it practically difficult for the Commission, not as individuals but as an institution, even to sustain the degree of protection that it has been able to create for some of the players.

LISTNUM 1 \l 16410             I know it's not much fun, but you may want to reflect on the capacity of the state, even if the state were completely willing to continue to create the kind of intervention and protection at the detailed level that you are seeking.

LISTNUM 1 \l 16411             I don't ask you to respond.  I say to you ‑‑ I hope you will hear it sincerely, because I am saying it sincerely ‑‑ it doesn't mean that we don't take seriously the issues that you have race, it is just that we have to ask you difficult questions in order to understand what your point is and where you are trying to go.  I appreciate your attempts to answer those questions.

LISTNUM 1 \l 16412             MR. McMAHON:  We certainly appreciate the opportunity to present our concerns and we do understand that the landscape is shifting around us all dramatically as we sit here and try to fight for small details.

LISTNUM 1 \l 16413             I would like to say in closing that with ‑‑


LISTNUM 1 \l 16414             COMMISSIONER FRENCH:  Excuse  me, I don't want to necessarily say it is closing, Mr. McMahon.  There may be other questions.

LISTNUM 1 \l 16415             MR. McMAHON:  Oh, I'm sorry.  All right.

LISTNUM 1 \l 16416             COMMISSIONER FRENCH:  That was for me only.

LISTNUM 1 \l 16417             MR. McMAHON:  Sorry.  Okay.

LISTNUM 1 \l 16418             COMMISSIONER FRENCH:  We will promise to give you a chance at the end to summarize as you wish, all right.

LISTNUM 1 \l 16419             MR. McMAHON:  Sorry, it is my first appearance before this Commission.

LISTNUM 1 \l 16420             I would like to say, just on the note of lack of trust, our appearance here today is to fight for something that we believe in and we would like to say that DOC does support public broadcasting.  We see it as the green space in the broadcast landscape that a shifting around us.

LISTNUM 1 \l 16421             We by no means meant to cast aspersions on public broadcasting or on the CBC's role, just we are looking for basically those little details that you say may be becoming more irrelevant as we go forward.

LISTNUM 1 \l 16422             THE CHAIRPERSON:  Vice Chairman Arpin...?


LISTNUM 1 \l 16423             COMMISSIONER ARPIN:  Thank you, Madam Chair.

LISTNUM 1 \l 16424             Well, in light of the discussion you just had with Vice Chair French, I don't know if what I will say will help you much better, but maybe the first one will.

LISTNUM 1 \l 16425             Mr. McMahon, in your presentation today you were referring to reality TV and factual entertainment.  I note that in the nature of service of The Documentary Channel they are not authorized to broadcast any Category 11 programming.

LISTNUM 1 \l 16426             So that may alleviate the situation of seeing The Documentary Channel turn into a reality TV station.

LISTNUM 1 \l 16427             On the other hand, your request that the CTF envelope be maintained directly to The Documentary Channel, well, as you probably know the CRTC does not have the oversight of the CTF.  That is the purview of Heritage Canada, so that decision cannot be made by the CRTC.


LISTNUM 1 \l 16428             But I will also say that more than likely the Board of Directors of the CTF is in a position to also make that decision and CFTPA and APFTQ ‑‑ which some of your members are probably also members of ‑‑ have three seats on the CTF, so it is more or less to them that you have to start talking first.

LISTNUM 1 \l 16429             Now, I also heard you saying that you don't want the Commission to get involved in terms of trade.  Obviously when we had the over‑the‑air television review these matters were discussed and all the producers to whom that question was asked all said the same thing:  We don't want the CRTC to get involved in terms of strength.

LISTNUM 1 \l 16430             You just stated that to Mr. French, so I think the discussion maybe has been worthwhile.  Maybe the CBC will pick up on it and may make some further commitments when they will appear in rebuttal or at other opportunities for discussion with you.

LISTNUM 1 \l 16431             Thank you.

LISTNUM 1 \l 16432             MR. McMAHON:  Yes.  Thank you.

LISTNUM 1 \l 16433             Did you want to say something?

LISTNUM 1 \l 16434             MR. MARGETIC:  If I may, the reason why we are concerned about factual programming is because CBC is on the record as saying that they see similarities, strong similarities, between documentaries and factual programming without having defined what they see as those similarities.


LISTNUM 1 \l 16435             So what we are concerned about is, having what is commonly Category 11, and what would be considered Category 11, be labelled factual programming which is akin to documentary and sneak under the documentary rubric since CBC has not provided us with a clear definition of how the two are similar.

LISTNUM 1 \l 16436             CHAIRPERSON:  Mr. McMahon, we don't have any further questions for you, but if there was something that you would like to say ‑‑ I know you started when you were discussing with Mr. French "In closing".

LISTNUM 1 \l 16437             If there is one final statement that you would like to make, I would like to give you this opportunity to do that right now.

LISTNUM 1 \l 16438             MR. McMAHON:  No, I appreciate that.  Thank you.

LISTNUM 1 \l 16439             Simply that we would like to see, if this transaction is approved, that there are ‑‑ that the channel is run in such a way that we are protecting the funding that is going towards documentaries, particularly the feature length documentary form, and that the diversity and competition in the marketplace is not diluted as a result of the transaction.


LISTNUM 1 \l 16440             These are our primary concerns.  We support the public broadcaster and we just simply are looking for conditions that will protect our membership, which are largely individual film‑makers working on small budgets on a one‑off every 12‑to‑24‑month basis making a single film, and it is vitally important for that community to have reasonable access to the market under fair terms.  That's all.

LISTNUM 1 \l 16441             Thank you for the opportunity to present our position today.

LISTNUM 1 \l 16442             THE CHAIRPERSON:  Thank you for participating and being quite honest with your views.

LISTNUM 1 \l 16443             Thank you very much.

LISTNUM 1 \l 16444             MR. McMAHON:  Thank you.

LISTNUM 1 \l 16445             THE CHAIRPERSON:  Madam Secretary...?

LISTNUM 1 \l 16446             THE SECRETARY:  This completes the list of appearing intervenors, therefore Phase II.

LISTNUM 1 \l 16447             THE SECRETARY:  We will now proceed to Phase III where the applicant may respond to all the interventions.

LISTNUM 1 \l 16448             The applicant has advised me that they will not be appearing in this phase.

LISTNUM 1 \l 16449             This completes the consideration of Item 19 on the Agenda of this public hearing.

LISTNUM 1 \l 16450             Thank you, Madam Chair.

LISTNUM 1 \l 16451             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 16452             We will now take a break of 15 minutes and resume at 4 o'clock.


LISTNUM 1 \l 16453             Thank you.

‑‑‑ Upon recessing at 1545 / Suspension à 1545

‑‑‑ Upon resuming at 1600 / Reprise à 1600

LISTNUM 1 \l 16454             THE CHAIRPERSON:  Order, please.

LISTNUM 1 \l 16455             Madam Secretary...?

LISTNUM 1 \l 16456             THE SECRETARY:  We will now proceed with Item 20 on the Agenda, which is an application by CJRN 710 Inc. to renew the licence of the commercial radio programming undertaking CKEY‑FM Fort Erie and its transmitter CKEY‑FM‑1 St. Catharines, expiring 30 June 2007.

LISTNUM 1 \l 16457             In January of 2005 the Commission decided to renew CKEY‑FM's licence for a period a year and a half.  After renewing the licence, the Commission monitored the programming broadcast by this station on two separate occasions which raised serious preoccupations with respect to the amount of local programming.  The Commission expects the licensee to show cause at this hearing why a mandatory order should not be issued requiring the licensee to provide a sufficient level of local Fort Erie‑oriented programming to be deemed to operating in compliance with its condition of licence number 9.

LISTNUM 1 \l 16458             Appearing for the applicant is Mr. David Dancy and his legal counsel Joel Fortune.


LISTNUM 1 \l 16459             Legal...?

LISTNUM 1 \l 16460             MS DIONNE:  Mr. Dancy, as part of the procedure that Panel has requested that your statements be taken under oath.

AFFIRMED:  MR. DAVID J. DANCY

LISTNUM 1 \l 16461             THE SECRETARY:  You have now 20 minutes to make your presentation.

LISTNUM 1 \l 16462             Thank you.

PRESENTATION

LISTNUM 1 \l 16463             MR. DANCY:  Madam Chair, Commissioners, my name is David Dancy, President of CJRN 710 Incorporated, licensee of CKEY‑FM.  With me today is Joel Fortune of Johnston and Buchan.  Regrettably, Mr. Andrew Ferri, a principal investor and my business partner, is unable to be here today as he has just been released from hospital.  I assure you he is doing well, but he is unable to travel at this time.

LISTNUM 1 \l 16464             Madam Chair, Members of the Commission, we are proud that during this licence term we have, we believe, remained committed to serving our local community and especially the youth and young adults in that community.


LISTNUM 1 \l 16465             I will address the concerns noted by the Commission in connection with this hearing in a moment.  I would like to begin, however, by providing some background about CKEY‑FM and reporting on the issues discussed during our June 2004 hearing.

LISTNUM 1 \l 16466             CKEY‑FM is licensed to serve Fort Erie together with our rebroadcast transmitter located in St. Catharines.  Our market area is the Niagara Peninsula.  A large majority of our retail and national advertising is based on our coverage of Fort Erie and Niagara Falls.

LISTNUM 1 \l 16467             As I am sure you know, we are located across the water from a large American city.  We compete with over 25 stations within the Buffalo EMA for the loyalty of Canadian listeners.

LISTNUM 1 \l 16468             In September 2002, as part of our overall strategy to improve our position, we relaunched CKEY‑FM as "Wild 101" using a contemporary hit format targeted to the teen and 18 to 24 audiences.  This is a tough format to operate.  Without CKEY‑FM, this format ‑‑ which targets the audience for large number of Canada's new and emerging artists ‑‑ would be available to Canadian audiences in the Niagara Peninsula only from a Buffalo station, with little and usually no Canadian music.


LISTNUM 1 \l 16469             In June 2004, I appeared before the Commission for the first time to discuss the renewal of our licence.  I was able to advise the Commission that despite significant competition from stations in Buffalo our audience numbers had increased.  In the Fall 2003 BBM ratings, Wild 101 was the dominant station among Canadian listeners in the 12 to 24 and 12 to 34 demographic.

LISTNUM 1 \l 16470             The BBM numbers confirmed that our Canadian audience increase had been at the expense of American stations and thus we were repatriating Canadian tuning.  We considered this to be an important accomplishment in the Battle of Fort Erie/Niagara versus Buffalo.

LISTNUM 1 \l 16471             The June 2004 renewal hearing focused on three issues:  our relationship at the time with Citadel Broadcasting; our compliance regarding the proper keeping of our program logs, music lists and the broadcasting of Canadian music selections; and our level of local programming.

LISTNUM 1 \l 16472             Let me tell you what has happened since then.

LISTNUM 1 \l 16473             With respect to our relationship with Citadel, the Commission found that "no change of control" had taken place and that we had been responsible for our programming.  We have since then ended our relationship with Citadel.


LISTNUM 1 \l 16474             Second, with respect to the maintenance of logs, music lists and Canadian content levels before our last renewal, the Commission found that we had not complied with logging and music list requirements in the first instance, although it is noted in our 2004 renewal decision that we did correct our logs and music lists when the deficiency was pointed out to us.  There was no non‑compliance with the level of Canadian music.

LISTNUM 1 \l 16475             Since then we have complied with all logging and Canadian content requirements.

LISTNUM 1 \l 16476             With respect to music lists, in 2005 the Commission noted our recording of montages was not clearly enough identified.  We immediately took steps to ensure montages were identified more clearly and detailed to the Commission the steps taken.

LISTNUM 1 \l 16477             With respect to the question of local programming, the transcripts of the June 2004 hearing show that the Commission discussed with us the possibility of implementing a condition of licence requiring three hours of news and spoken word content of which 15 percent would be local content.


LISTNUM 1 \l 16478             After the hearing, we immediately reprogrammed all of our days and day‑parts to conform to this and informed Commission, in writing, on June 15, 2004, only seven days after the hearing, that the commitment had been implemented.  To accomplish this, we added a full‑time news person, contracted for weather reports from Environment Canada, contracted traffic services from Wise Traffic, and I hired a new promotions director.

LISTNUM 1 \l 16479             The condition of licence ultimately imposed was for three hours of news and no mention was made a spoken word content.

LISTNUM 1 \l 16480             To be forthright, we misunderstood this condition.  We proceeded on the basis of our earlier letter to the Commission after our renewal hearing.  This was a mistake on our part, and we acknowledge this mistake.

LISTNUM 1 \l 16481             The Commission released its renewal decision in January 2005.  Between May 29 and June 4, 2005 the Commission conducted an audit of our local programming.  On October 31, 2005 the Commission informed us that we had incorrectly included certain elements as news, including some weather and traffic reports, and that our information programming did not count towards our "news" condition of licence.

LISTNUM 1 \l 16482             Looking back, we should have realized from when the Commission released our renewal decision in January 2005 that we had not correctly implemented the news requirement.


LISTNUM 1 \l 16483             Please keep in mind, though, that we wrote to the Commission in June 2004, right after our hearing, setting out our plan regarding news and local content and had followed that planned for a full seven months before the release of the renewal decision.  We were not "on the lookout" for the problem, as it were, and it did not leap out at us.

LISTNUM 1 \l 16484             In October 2005, when the Commission staff pointed at the deficiency, we realized our mistake regarding our condition of licence.  We immediately corrected it.

LISTNUM 1 \l 16485             There was also, we acknowledge, a shortfall in total news and information time.  This resulted in staff changes.

LISTNUM 1 \l 16486             After that point, we made sure news included only news reports and no entertainment information, and we programmed the full allotment of three hours per week.  In fact, to be on the safe side, we programmed an additional 10 percent to ensure compliance.


LISTNUM 1 \l 16487             I also instituted a policy that there should be no uncertainty regarding whether an item is, in fact, news when it is included in the news reports.  Entertainment‑related items that might be newsworthy were essentially stripped from our newscasts.  The message to our new staff was "If you have to ask whether it is news, don't include it."

LISTNUM 1 \l 16488             Reviewing, then, what took place at an immediately after our last hearing, two out of three issues that the Commission identified with us were addressed or were not in fact issues.

LISTNUM 1 \l 16489             For the third issue, local programming, we implemented our oral commitment to the Commission at our renewal hearing, as we understood it, fully seven months before the Commission released our renewal decision.  When our mistake regarding the amount of news programming was brought to our attention in October 2005, we immediately corrected it.

LISTNUM 1 \l 16490             This brings us to the more recent audit.

LISTNUM 1 \l 16491             About a year ago, in February and March of 2006, the Commission conducted a second audit, and a one‑day audit on March 1 of our entire local programming.  The  Commission confirmed that we were broadcasting three hours of news, plus an additional 10 percent per week.

LISTNUM 1 \l 16492             However, the Commission questioned the composition of some of the new stories and asked how we conformed to our condition of licence regarding local content.


LISTNUM 1 \l 16493             In its analysis the Commission stated that we had broadcast four local stories in total that week.  Respectfully, we disagree with that finding.

LISTNUM 1 \l 16494             We have reviewed carefully the analysis of that week and note the following:

LISTNUM 1 \l 16495             On Sunday of that week we reported as the lead story a lake snow advisory warning of up to 36 inches of snow.  Where I live, 36 inches of snow is news.  Again, it led our newscast.  This report was in addition to our usual weather forecast.  We repeated that story three times on that day.

LISTNUM 1 \l 16496             On Monday with reported on a poll of Buffalo residents on the possibility of a new casino in Buffalo.  This is relevant in relation to Fort Erie Racetrack Slots and the Niagara Falls casinos which depend heavily on visitors from Buffalo, which does not currently have a casino.  My recollection is that this story was covered in other local media, including local papers.

LISTNUM 1 \l 16497             On Wednesday we reported three times on the jury verdict in an attempted murder trial in Niagara Falls, Ontario in respect to an assault on the former Mayor of Niagara Falls, Ontario.


LISTNUM 1 \l 16498             Also on Wednesday we reported twice on the fact that the Canadian dollar hit a 14‑year highs.  In a border, retail and accommodation, tourist‑dependent area like ours, the rise of the Canadian dollar is of real and direct local significance.

LISTNUM 1 \l 16499             On Thursday we reported three times on the decision taken by Homeland Security in the U.S. to tighten security on the Canada/U.S. border.  This is directly relevant to people in our area.  We have four border crossings and local residents use these crossings as part of daily life.  While this story may have national scope, in my mind, respectfully, for local residents this is somewhat comparable to reporting on a toll gate being put up on a bridge between Gatineau and Ottawa.

LISTNUM 1 \l 16500             On Friday we reported twice on a man from Niagara‑on‑the‑Lake who died in a fatal car accident.

LISTNUM 1 \l 16501             Also on Friday, we reported on the fact that Niagara Police were looking for a missing Thorold woman.  Thorold is a community in the middle of the Niagara Peninsula.

LISTNUM 1 \l 16502             On Saturday we reported three times on the Niagara Regional Police cracking down on local drug trafficking in Fort Erie, St. Catharines and Welland.


LISTNUM 1 \l 16503             This is eight separate stories and 18 stories throughout our newscasts.

LISTNUM 1 \l 16504             With respect to March 1, 2006, the specific day that the Commission audited our local programming, we aired on that day:  10 local traffic reports; 45 local weather reports; five local news stories, the jury verdict and the Canadian dollar stories; and 11 mentions of a local event, the Juelz Santana concert in St. Catharines with a CKEY‑FM event afterwards at a local club called Rockford's.

LISTNUM 1 \l 16505             I am unsure of the exact number of our daily "Wild 411" segments, promotions promoting station functions and concert details, but the Commission noted that it was "well covered".

LISTNUM 1 \l 16506             To put the week at a glance, CKEY‑FM broadcast:  57 local traffic reports; 238 local weather reports; 18 locally relevant news stories; and 75 mentions of local events; our daily "Wild 411" segments, which typically run 12 times a day, seven days a week.

LISTNUM 1 \l 16507             During the week, CKEY‑FM presented a four‑hour live broadcast from Casino Niagara on Friday, March 3, followed by a two‑hour broadcast from Rumours Night Club on Clifton Hill in Niagara Falls, for a total of six hours live that these two locations.


LISTNUM 1 \l 16508             All but seven hours of our programming during this week was produced by us, at our studios, solely for use on CKEY‑FM.

LISTNUM 1 \l 16509             In February and March of 2006 analysis, the Commission noted the fact that we had not reported on local sports.

LISTNUM 1 \l 16510             We had chosen not to report on local sports regularly, mostly because local sports are limited.

LISTNUM 1 \l 16511             In our reply to the Commission we indicated our view, which we continue to believe is true, that the Commission's policy at the time did not require us to report on local sports all the time.  We noted in our reply that we did occasionally provide local sports where it would be especially relevant to the local audience and our demographic.

LISTNUM 1 \l 16512             We recognize the Commission, with the release of the new Commercial Radio Policy, has now amended language in its policy.

LISTNUM 1 \l 16513             It was also stated in relation to the February/March 2006 analysis that we had not covered community events.


LISTNUM 1 \l 16514             The term "community events" is not used in the description of local spoken word programming to be provided by licensees.  The phrase that is used is the "promotion of local events and activities".

LISTNUM 1 \l 16515             Clearly, we promoted local events.  For the week in question, we are not so sure that we promoted local "activities" as opposed to "events".

LISTNUM 1 \l 16516             In our reply to the Commission after this audit we noted that, similar to local sports, the promotion of local activities was not then a requirement of the Commission's policy.  The Commission has now amended the language in its policy.

LISTNUM 1 \l 16517             In reviewing these local spoken word elements in our weekly broadcast, we concluded that during the audit week we had complied with the condition of licence requiring us to provide three hours of news and spoken word content, as described in Public Notice 1993‑38, of:

"... direct and particular relevance to the community served such as local news, weather, sports, and the promotion of local events and activities."

LISTNUM 1 \l 16518             Clearly, we were in compliance with the requirement to provide more than three hours of news and exceeded that requirement by 10 percent.


LISTNUM 1 \l 16519             I would just like to note that since almost all of our programming is produced by us solely for CKEY‑FM, including the news component, and is broadcast solely on that station, we exceed, therefore, by close to three times the minimum amount of programming that must be produced locally by licensees.

LISTNUM 1 \l 16520             Let me just summarize the outcome of the February/March 2006 audit:

LISTNUM 1 \l 16521             We broadcast more than three hours of news.

LISTNUM 1 \l 16522             We broadcast, we believe, 18 local news stories.

LISTNUM 1 \l 16523             We broadcast numerous local weather and local traffic reports.

LISTNUM 1 \l 16524             We mentioned local events numerous times.

LISTNUM 1 \l 16525             We broadcast six hours of "on location" programming from our local market.

LISTNUM 1 \l 16526             All of our programming, except for seven hours, was produced locally in our studios solely for CKEY‑FM.

LISTNUM 1 \l 16527             We didn't, it is true, cover local sports or local activities as such, but we don't think it was a requirement at that time.


LISTNUM 1 \l 16528             I should also note that during all of this time, and up to this day, CKEY‑FM was every hour identified by its call sign, CKEY‑FM, and licensed community, Fort Erie.  This is not a case, let us emphasize, where we were attempting to appear to be a station other than a Canadian station based in Fort Erie.

LISTNUM 1 \l 16529             We believe, based on this review, that we did meet the requirement to provide locally relevant spoken word content.  At least we think that it must be clear that we believed in good faith that we did meet this requirement.

LISTNUM 1 \l 16530             There is no question, we believe, of an attempt by us to avoid our obligation to provide locally relevant spoken word content.  Instead, it seems to us that we have a disagreement between what we believe to have been a conscious effort on our part to meet the letter and spirit of our conditions of licence and the results of the February/March 2006 audit review.

LISTNUM 1 \l 16531             Since the audit review, we have taken more steps to provide local content on our service.  While we believe we were in compliance in 2006, we did not then, and do not now, wish there to be any question.  Here is what we have done:


LISTNUM 1 \l 16532             We have added the community calendar broadcast once per hour which includes events and activities throughout the Niagara Peninsula relevant to our audience, such as concerts, entertainment events and lifestyle activities.

LISTNUM 1 \l 16533             We also informed our on‑air staff in June 2006 that they would be required to ensure that at least 30 percent of local content ‑‑ meaning news, events, activities ‑‑ refer to communities throughout the Niagara Peninsula.

LISTNUM 1 \l 16534             As you know, in December 2006 the Commission released its new Commercial Radio Policy and its requirement regarding local spoken word content to read:

"In their local programming, licensees must incorporate spoken word material of direct and particular relevance to the community served.  This must include local news, weather, sports coverage, and the promotion of local events and activities."


LISTNUM 1 \l 16535             Immediately after the policy was released, CKEY‑FM added results coverage of the entire Golden Horseshoe Junior B Hockey League, which consists of seven teams exclusively from the Niagara area, out of an 18 League.

LISTNUM 1 \l 16536             We now provide local sports in the morning segment once each hour for four hours.

LISTNUM 1 \l 16537             We are investigating which local sports to cover after the hockey season ends.  We had already, as noted above, insured our coverage included the other local elements.

LISTNUM 1 \l 16538             We wish to state unequivocally our commitment for the next licence term to continue all of the local spoken word components we have described above in our local programming.

LISTNUM 1 \l 16539             During the renewal term we acted in good faith to meet every condition or expectation the Commission has outlined to us.  We have acted so as to respect the rules.  We did make a mistake, we know, regarding our "news" condition of licence, which we then corrected immediately.

LISTNUM 1 \l 16540             Since then we have abided, we believe, by the letter and spirit of our condition of licence and have steadily increased our specific local content.


LISTNUM 1 \l 16541             Looking forward, CKEY‑FM is doing everything we can to compete with new technological realities and with our direct competitors in Buffalo.  We are committed to serving the youth and young adult market in Niagara.  We will abide by our commitments regarding local programming which we have set out above.

LISTNUM 1 \l 16542             We are prepared as well, having looked at another case in which a broadcaster was found "off‑side" on local content rules ‑‑ in respect to stations in Smiths Falls and Chilliwack ‑‑ to file bi‑monthly reports with the Commission confirming the fulfilment of our specific commitments as outlined above.  These reports will be signed by me or another officer of our company who will be directly responsible for compliance.

LISTNUM 1 \l 16543             Thank you for this opportunity to present our case.  We respectfully request that the Commission renew our licence to coincide with terms of licences in our market.  I look forward to your questions.

LISTNUM 1 \l 16544             I hope we will also have a chance to talk with you today about serving the youth and young adults in our market, how we promote new and emerging Canadian artists, and our plans for doing so in the future.


LISTNUM 1 \l 16545             THE CHAIRPERSON:  Mr. Dancy and Mr. Fortune, good afternoon and thank you for being here.

LISTNUM 1 \l 16546             I just want to note that I have read the extensive correspondence between you and our staff and I want to thank you for that and I want to thank you for the clarity with which you have presented your opening remarks this afternoon, but I do still have some questions for you.

LISTNUM 1 \l 16547             You are appearing before us today because essentially we need to discuss with you what constitutes and what you understand to be local programming as it relates to spoken word, how that programming adequately reflects the local market you are licensed to serve and what exactly is that local market and how you define it as articulated in your last licence renewal decision, which of course includes a condition of licence defining local program.

LISTNUM 1 \l 16548             So let's start with how we got here.

LISTNUM 1 \l 16549             You did mention in your opening remarks the two monitoring reports that we conducted, and while the first week of monitoring found that you were broadcasting an hour and 34 minutes of news, the second period of monitoring resulted in three hours and 18 minutes or, as you say, 10 percent more then you were required.


LISTNUM 1 \l 16550             You did provide us with some details, both in your correspondence and in your oral presentation this afternoon, but can you give us a little bit more detail as what actions you took or what measures you put in place that saw that increase from an hour and 34 minutes to three hours and 18 minutes?

LISTNUM 1 \l 16551             MR. DANCY:  Yes.  We are looking at a teen and young adult market is what we are trying to program to.  What I had said to them was that if they had to question whether or not it was news, then it wasn't news.

LISTNUM 1 \l 16552             So even CBC reported that Britney Spears cut her hair and it was sold on eBay.  That was considered news on many radio stations.  It was not considered news on my radio station because of the problems that we have had.

LISTNUM 1 \l 16553             I would think that in a normal situation that would have been considered news, but in our situation it was not.

LISTNUM 1 \l 16554             What I had said to them was that it must be hard news, period, full stop.  If you have to guess if it is news, it is simply not news.


LISTNUM 1 \l 16555             Second, because of the market we are going at, to do a wheel of information that is repeated every half hour like traditional Adult contemporary stations or Rock stations that deal with a 35‑64 market, just wouldn't work.  Teens and young adults aren't going to tune in for three minutes to listen to the same stories over and over again.

LISTNUM 1 \l 16556             So I had asked them to be a bit eclectic, to get a variety of stories.  You will see in a week that we broadcast more than 187 different stories by the Commission's own analysis.  An average station wouldn't put that many stories ‑‑ that different stories on the air.

LISTNUM 1 \l 16557             And the stories that we did repeat, I hope you will appreciate, were local stories.  The ones that we did repeat were local stories.

LISTNUM 1 \l 16558             But when you are asking somebody to do that kind of volume, we wanted hard news, so therefore I told the stuff that they had to have a hard news.  Since then I have said that not only does it have to be hard news, but 30 percent of everything that goes as part of news must be local content, and "local", after talking to Commission staff, they have told me that they do understand it to be St. Catharines, Niagara or the Niagara Peninsula as local content.

LISTNUM 1 \l 16559             THE CHAIRPERSON:  Did you increase the number of staff members dedicated solely to news?

LISTNUM 1 \l 16560             MR. DANCY:  Yes, we did.


LISTNUM 1 \l 16561             THE CHAIRPERSON:  By how many?

LISTNUM 1 \l 16562             MR. DANCY: One.

LISTNUM 1 \l 16563             THE CHAIRPERSON:  That is a full‑time, permanent position?

LISTNUM 1 \l 16564             MR. DANCY:  Yes.  They only work on CKEY‑FM news and they get to the radio station between 3:30 and 4:00 in the morning and they work until approximately noon.

LISTNUM 1 \l 16565             THE CHAIRPERSON:  That brings your total complement of news staff therefore to what number?

LISTNUM 1 \l 16566             MR. DANCY:  For the company or for the station?

LISTNUM 1 \l 16567             THE CHAIRPERSON:  For the station.

LISTNUM 1 \l 16568             MR. DANCY:  One.  It is the morning news person, and we have two weekend news people.

LISTNUM 1 \l 16569             THE CHAIRPERSON:  All right.  That is your full complement of newspeople ‑‑

LISTNUM 1 \l 16570             MR. DANCY:  Yes.

LISTNUM 1 \l 16571             THE CHAIRPERSON:  ‑‑ to cover Niagara Falls, the whole Niagara Peninsula and Fort Erie?

LISTNUM 1 \l 16572             MR. DANCY:  Yes.

LISTNUM 1 \l 16573             THE CHAIRPERSON:  So how is this news packaged and delivered on‑air?  Because it is not an insignificant area that you are covering.


LISTNUM 1 \l 16574             MR. DANCY:  No.  We look at a combination of locally, nationally, regionally, internationally, we look for stories that maybe other people might not cover that maybe are a bit eclectic, that may be a bit off the wall, things that may happen in, let's say, Pakistan or the United States, things are happening all around.

LISTNUM 1 \l 16575             We are looking for stories that would be of interest to the people that we are trying to serve.  We are looking for stories that have maybe a bit of a twist of them, we are looking for stories that ‑‑ but again, they all have to have a news base.  They can't be anything to do with sports, weather, entertainment, anything else.  They must be strictly news based.

LISTNUM 1 \l 16576             THE CHAIRPERSON:  I guess, Mr. Dancy, my point is:  With one full‑time news person and two people working on the weekend, and you have the entire Niagara Peninsula to cover in terms of local stories, is that enough of a news complement to be able to go out into the Niagara Peninsula and gather those stories?

LISTNUM 1 \l 16577             How do you have access to those local stories with essentially two people?


LISTNUM 1 \l 16578             MR. DANCY:  Well, primarily the announcers also.  I mean, we have Heart Niagara come in, when we have the fire department come in to talk about the Ontario law stating that every floor has to have fire alarms on there.

LISTNUM 1 \l 16579             I mean, when I say we have one, we have one person dedicated solely to news, that's it that's all they do.  We have other staff members who are on‑the‑air, seven other staff members who are out at activities and events, you know, whether it is at bars or clubs or concert events or activities in the area, everything from a Santa Claus Parade to the Friendship Festival, I mean we have other staff members that are out in the community, but as far as specifically dedicated to news we have the one person.

LISTNUM 1 \l 16580             THE CHAIRPERSON:  I am assuming, therefore, that that person is the one who is responsible for news content and news orientation?

LISTNUM 1 \l 16581             MR. DANCY:  Yes.

LISTNUM 1 \l 16582             THE CHAIRPERSON:  So your on‑air staff may be out covering community events or community activities.

LISTNUM 1 \l 16583             How many on‑air staff, personnel, do you have?

LISTNUM 1 \l 16584             MR. DANCY:  Two, three, four, five, six, seven, eight.


LISTNUM 1 \l 16585             THE CHAIRPERSON:  Are those full‑time positions?

LISTNUM 1 \l 16586             MR. DANCY:  Six are full‑time, two are part‑time.

LISTNUM 1 \l 16587             THE CHAIRPERSON:  All right.  Are any of those positions incremental to the time that we found you had non‑compliance with the amount of news?

LISTNUM 1 \l 16588             MR. DANCY:  Yes.

LISTNUM 1 \l 16589             THE CHAIRPERSON:  In other words, did you add on‑air staff as well?

LISTNUM 1 \l 16590             MR. DANCY:  Yes, we did.

LISTNUM 1 \l 16591             We only had on‑air staff in the morning and in the afternoon drive previous to this.  We now have morning ‑‑ we do voicetracking, but we still have the person in the building doing it mid‑day's; we have afternoon drive; we have an evening announcer and we have three weekend announcers.

LISTNUM 1 \l 16592             THE CHAIRPERSON:  All of these measures and actions that you have put in place are permanent and therefore ensuring future compliance?

LISTNUM 1 \l 16593             MR. DANCY:  They have been in place since June 15, 2004.

LISTNUM 1 \l 16594             THE CHAIRPERSON:  And they are not going away?

LISTNUM 1 \l 16595             MR. DANCY:  No, that's right.


LISTNUM 1 \l 16596             THE CHAIRPERSON:  All right.  Thank you.

LISTNUM 1 \l 16597             Now, the definition of "local programming" states that"

"Licensees must include spoken word material of direct and particular relevance to the community served."  (As read)

LISTNUM 1 \l 16598             I read your letter of June 15, 2006, so my question to you is this:  Do you see a difference between "locally relevant" and "material of direct and particular relevance"?

LISTNUM 1 \l 16599             In other words, if you deem an item to be "locally relevant", do you automatically assign it as being "direct and particularly relevant"?

LISTNUM 1 \l 16600             MR. DANCY:  There are two cases.  I think if it is locally relevant, for example the border security ‑‑ the Peace Bridge lands in Fort Erie.  We have three other bridges that connect, two in Niagara Falls and one in Queenston, which is Niagara‑on‑the‑Lake.

LISTNUM 1 \l 16601             I mean, we have four bridges that connect.  So is that locally relevant?  Yes, it is.

LISTNUM 1 \l 16602             THE CHAIRPERSON:  And therefore is it also "direct and particularly relevant"?


LISTNUM 1 \l 16603             MR. DANCY:  Yes, I believe it is.  But there are stories like when the Niagara Regional Police ‑‑ which may not be relevant to anywhere else but only relevant to Niagara ‑‑ when they are cracking drug trafficking in Fort Erie, Welland and St. Catharines.  I think that is one that may not be relevant somewhere else.

LISTNUM 1 \l 16604             So when we deem that it is particularly relevant to our community, yes, I believe they are ‑‑ but they may not be relevant outside the community.  The border security issue might be a global issue.

LISTNUM 1 \l 16605             THE CHAIRPERSON:  If you had to determine a percentage of your news stories that were locally relevant versus news stories that were of direct in particular relevance, could you do that?

‑‑‑ Pause


LISTNUM 1 \l 16606             MR. DANCY:  What we have changed the policy in doing now to make sure it is not only locally relevant in particular, is the fact that now we will discuss if the news story for example in border security is discussed, we will specifically talk about how it relates to Fort Erie or Niagara Falls or a specific area within our market.  So now we are actually taking a story that was maybe locally relevant before and now we are making it particular to the market and specific to the market.

LISTNUM 1 \l 16607             THE CHAIRPERSON:  Providing some contextualization therefore.

LISTNUM 1 \l 16608             MR. DANCY:  Yes.

LISTNUM 1 \l 16609             THE CHAIRPERSON:  All right.  Thank you.

LISTNUM 1 \l 16610             In that same letter of June 15th you say that:

"CJRN has substantially increased the amount of spoken word programming, including such programming that is of direct in particular relevance to your local market."  (As read)

LISTNUM 1 \l 16611             Now, you do know that as a result of our monitoring, you to talk about it in your oral presentation today, we did find that out of 187 news items only four ‑‑ or 19 after we reclassified them, they were local stories.  But that was still a small number, you know, 19 out of 187 news stories were local.

LISTNUM 1 \l 16612             So how is it that even though you said you substantially increased we still found a very low number of local news stories?


LISTNUM 1 \l 16613             MR. DANCY:  I think because we didn't localize it the way I just spoke of.  What we did was, we left the stories as they were for example.  I again use the border security because that is the issue we are talking about, and there were 187 stories.

LISTNUM 1 \l 16614             Again, please understand that 187 stories for a radio station in our format, that is a huge amount of stories.  If you look at the one in Vancouver, if you look at the Toronto CHR station, Halifax ‑‑ those are the only three that I'm aware of ‑‑ and Kitchener, those are the only three stations that I am aware of right now doing CHR broadcasting.  It is virtually gone from the landscape because teens and youths are very, very hard to reach.

LISTNUM 1 \l 16615             When you are doing three hours of news, hard news, which I don't think ‑‑ in my correspondence you must realize it was a shock that it wasn't three hours of news and spoken word content, it was three hours of news.  It wasn't what we talked about at the hearing in 2004.

LISTNUM 1 \l 16616             So we had to go and we had to make it so that was acceptable, or what we believed was acceptable, to try to make the station so that the teens and youth would not tune out.


LISTNUM 1 \l 16617             So we didn't do just a wheel of information.  I guess if we had done a wheel of information and just done it at every half hour and done the same stories, you would have had a higher percentage of local news.  Now what we have done is, we have made sure that 30 percent of the stories that we air have local relevance.

LISTNUM 1 \l 16618             And yes, we have either ‑‑ you have talked about them in a larger context that are locally relevant and made them specific and particular to our market by talking about how they affect a community or a group in our market.

LISTNUM 1 \l 16619             THE CHAIRPERSON:  Do you produce your news in a way that is ‑‑ I suppose the word is "different" than other radio broadcasters because of the youth as your target demo in other words?

LISTNUM 1 \l 16620             MR. DANCY:  Yes.

LISTNUM 1 \l 16621             THE CHAIRPERSON:  Is a very distinctive from other radio stations and, if so, explained to me how you make it distinctive and attractive to a younger demo.

LISTNUM 1 \l 16622             MR. DANCY:  What we try to do is we try not to repeat the same stories that you are going to see in the National Post or on CBC ‑‑ with all due respect to both those fine institutions ‑‑ don't have a huge under 35 audience using them.


LISTNUM 1 \l 16623             THE CHAIRPERSON:  Right.

LISTNUM 1 \l 16624             MR. DANCY:  So the stories are written in a way and delivered in a way that the youth can relate to ‑‑ or we believe they are.  The person who is doing the news is 22 years old on CKEY.  With all due respect to her, she does a great job for us and we are very lucky to have her, but she doesn't have the experience that maybe a seasoned newscaster on 680 News in Toronto would have.

LISTNUM 1 \l 16625             So we try to work with somebody who has a great delivery and we try not to deliver like a hard newscast like what would be done on a News Talk radio station or a standard Adult Contemporary station that looks after a 35‑64 audience.

LISTNUM 1 \l 16626             Because these people haven't grown up with radio.  Radio is not part of their regular usage.  If you look at the radio tuning, it is not part of their technology they use today.  So we have to make inviting to them to be able to ‑‑ to want to use our medium and to do that we try to attract them.


LISTNUM 1 \l 16627             I admit we attract them with our music, okay.  If we don't play the right music we are not going to attract them.  What we try not to do is news ‑‑ news isn't ‑‑ I wouldn't say that news is what we consider an attraction for our radio station, okay.  As much as the Commission would like it to be that way, I haven't figured out a way to make news attractive to the youth and young adult market, so we try not to make it a tune out so they won't leave our radio station.

LISTNUM 1 \l 16628             THE CHAIRPERSON:  Again, in your oral presentation this afternoon you did provide us with some explanation as to why you didn't include local sports in your news or community activities, but given this target demographic group, can you just explain to us why you thought that including those features in your news would cause tune‑out?

LISTNUM 1 \l 16629             MR. DANCY:  Because this demographic can get TV on their cell phones.  They can choose any one of seven or 10 stations.  I realize that the Commission and that Canadians in general it is the view that there are only two satellite services.

LISTNUM 1 \l 16630             But we are in a border market.  I mean, I have neighbours who go to Buffalo and pay for service and get DirecTV, legally and they pay for it, and they don't use a Canadian service.


LISTNUM 1 \l 16631             These kids can get seven or eight sports channels, they can watch anything they want.  There are three on regular cable.  In our area channels ‑‑ I believe TSN is 28 or 29 and then we have 53 and 57 Rogers Sportsnet and another one.  That is on regular cable.

LISTNUM 1 \l 16632             Then when you start looking at the dishes, they have ESPN, they have everything else they want to watch.  They can watch soccer if they want, they can watch any sort of sports they want any time they want.  That is what the youth tend to want to do.

LISTNUM 1 \l 16633             For us to report on Junior B hockey, it is not really of that great interest to them.  If they love the sport ‑‑ and my son happens to play in that age level, they go to the games.  They don't wait to hear it on the radio.

LISTNUM 1 \l 16634             You know, my son knows the sports that night at 10:30 when he comes home after the game, he doesn't have to wait to the next morning to get it.  So in that particular youth group, that information really from radio is not that relevant.

LISTNUM 1 \l 16635             It's not like it was 20 years ago when people used to get all their information from their community radio station in the morning and the TV station at night.  Now they get news any time of the day, anywhere they want.  They can go on the Internet and get updated sports on everything they want.  Kids have computers in their bedroom hooked up to the internet.


LISTNUM 1 \l 16636             So we just don't think and through our studies ‑‑ listen, my oldest daughter is in first‑year university, my son is in Grade 11 and my daughter is in Grade 8, radio is not the most important thing.  They haven't an ear bud in their ear more often than not and their father owns radio stations.

LISTNUM 1 \l 16637             Yes, they do listen to the radio station, they do make their comments to my program director, I do use ‑‑ my father used to say grandmother research, by asking people instead of having necessarily formal studies all the time, but we just didn't feel ‑‑ and in our discussions with people, in our focus groups, one of the things that the youth and young adults, they have many, many sources to get sports. To tune into a radio and hear some scores, i just really wasn't relevant to them, at least that was our finding, but we are going to include them now.

LISTNUM 1 \l 16638             THE CHAIRPERSON:  Yes.  And you did in fact make that quite clear in your oral presentation.

LISTNUM 1 \l 16639             So you do understand what the new requirement is as stated in the new Commercial Radio Policy.

‑‑‑ Pause


LISTNUM 1 \l 16640             MR. DANCY:  Yes.  I just want to ‑‑ we have committed to doing Junior B.  We are looking for something to do after the ‑‑ right now it's Niagara Falls and St. Catharines in the finals.  One of them is going to go to the provincial championships.  After that we have to figure out something else to do.

LISTNUM 1 \l 16641             But my understanding is it is weekly.  It is sports relevant to the local market on a weekly basis.  So in weeks where there is not that much local sports ‑‑ it is not done on a daily or hourly basis, it is done on a weekly basis.  That is my understanding of the regulation.

LISTNUM 1 \l 16642             Is that correct?

LISTNUM 1 \l 16643             THE CHAIRPERSON:  We will have legal counsel ‑‑ legal counsel also has some questions for you so I will have legal counsel confirm that for you.

LISTNUM 1 \l 16644             MR. DANCY:  All right.

‑‑‑ Pause

LISTNUM 1 \l 16645             THE CHAIRPERSON:  Mr. Dancy, like I said, your oral presentation was quite clear and I don't have any other questions for you but, as I said, I know legal counsel does.

LISTNUM 1 \l 16646             Before we turn to legal, Commissioner Cram has questions for you.

LISTNUM 1 \l 16647             COMMISSIONER CRAM:  Thank you, Mr. Dancy.


LISTNUM 1 \l 16648             If I can take you to page 8 of your presentation today, while you were talking I was looking at March 1 in the monitoring and I was looking at the number of stories, I counted them up to 72 in terms of number of stories in the newscast for that day.

LISTNUM 1 \l 16649             Subject to check, that would be about average, would it?

LISTNUM 1 \l 16650             MR. DANCY:  Yes.

LISTNUM 1 \l 16651             COMMISSIONER CRAM:  I found the story at 8:23:05 about the Canadian dollar that you referred to.

LISTNUM 1 \l 16652             I don't know if this is a full report.  I don't know if it is a full transcript.

LISTNUM 1 \l 16653             MR. DANCY:  No, it wasn't the full, it was just to give the flavour of the story.

LISTNUM 1 \l 16654             COMMISSIONER CRAM:  All right.

"The Canadian dollar hit a 14‑year high.  StatsCan announces a solid growth of 2.9% brought on by Canadian consumers, businesses..."  (As read)

LISTNUM 1 \l 16655             Not one reference to your community there.


LISTNUM 1 \l 16656             So are you saying that you communitized it?

LISTNUM 1 \l 16657             MR. DANCY:  No.  That is what I was saying to Madam Chair.

LISTNUM 1 \l 16658             At that time what happened was that we accepted that it was locally relevant, that it was okay.  Now that story would be localized, saying "affecting Niagara residents" and it would say how it affected them.

LISTNUM 1 \l 16659             COMMISSIONER CRAM:  So what is your point on page 8 where you say "With respect to March 1" and you go down and it says:

"5 local news stories (the jury verdict and Canadian dollar)".

LISTNUM 1 \l 16660             MR. DANCY:  Yes.  Before what we were discussing, Madam Chair asked me if I considered the things that were locally relevant were also of direct and particular relevance.

LISTNUM 1 \l 16661             COMMISSIONER CRAM:  Yes.

LISTNUM 1 \l 16662             MR. DANCY:  I thought they were, but obviously the Commission thinks differently, and I accept that.  So now that we don't just think they are locally relevant, we make them particular to our community.

LISTNUM 1 \l 16663             COMMISSIONER CRAM:  All right.


LISTNUM 1 \l 16664             MR. DANCY:  That time was before we made the change in policy at the radio station.

LISTNUM 1 \l 16665             COMMISSIONER CRAM:  Yes.  So your assertion, though, today is then that there were only three local stories about the jury verdict?

LISTNUM 1 \l 16666             MR. FORTUNE:  Just to clarify, Commissioner Cram?

LISTNUM 1 \l 16667             COMMISSIONER CRAM:  Well, the assertion on page 8 is that the Canadian dollar story is a local news story.

LISTNUM 1 \l 16668             MR. DANCY:  Yes.

LISTNUM 1 \l 16669             MR. FORTUNE:  That is correct.

LISTNUM 1 \l 16670             COMMISSIONER CRAM:  You have agreed with me that it is not.

LISTNUM 1 \l 16671             MR. DANCY:  No, I'm sorry.  What I said was that we didn't localize it prior to getting the Commission's ‑‑ we consider it a local news story.  Absolutely I consider that a local news story.  It is locally relevant.  We cross the border all the time.  There are businesses that absolutely rely ‑‑

LISTNUM 1 \l 16672             COMMISSIONER CRAM:  So at 8:23:05 on March 1, '06 did you localize that news about the Canadian dollar?

LISTNUM 1 \l 16673             MR. DANCY:  No, but we still consider it locally relevant.


LISTNUM 1 \l 16674             COMMISSIONER CRAM:  All right.  It is just not of particular relevance.

LISTNUM 1 \l 16675             MR. DANCY:  Correct.

LISTNUM 1 \l 16676             COMMISSIONER CRAM:  All right.

LISTNUM 1 \l 16677             MR. DANCY:  Now we will change it.  Now my news department has been advised they must change it to make it not only ‑‑ if it is locally relevant, if it is the border issue, if it is a dollar issue, if it is something that may not be considered of particular relevance now have to localize it.

LISTNUM 1 \l 16678             COMMISSIONER CRAM:  So then three out of 72 stories on that day were particularly relevant?

LISTNUM 1 \l 16679             MR. FORTUNE:  Commissioner, I think to be fair to Mr. Dancy, I think he has said clearly that he believes that the story, the Canadian dollar story, when that was broadcast he believed that was a story ‑‑

LISTNUM 1 \l 16680             COMMISSIONER CRAM:  I understand that.

LISTNUM 1 \l 16681             MR. FORTUNE:  ‑‑ of direct and particular relevance to his community when that was broadcast.  And subsequently, with the audit and so on, discussions, came the recognition that it should in fact be particularized to better serve his community, but at the time this was broadcast the intention was that that would be local.


LISTNUM 1 \l 16682             COMMISSIONER CRAM:  I understand that, yes.

LISTNUM 1 \l 16683             I guess my question is ‑‑ well, no, I won't.

LISTNUM 1 \l 16684             So your point is that ‑‑ did you read the decision when you had your short renewal?

LISTNUM 1 \l 16685             MR. DANCY:  Yes.

LISTNUM 1 \l 16686             COMMISSIONER CRAM:  Clearly you didn't read it very well.

LISTNUM 1 \l 16687             MR. DANCY:  We had already put in what we saw was going to be the condition of licence, we had already implemented it seven months before it was written.  If you look at the transcript I believe it starts about 970 I think it is, the lines that were there, and at that time when we were talking about it we talked specifically about three hours of news ‑‑ three hours of spoken word, okay, which was news and local content.  It wasn't just news.

LISTNUM 1 \l 16688             COMMISSIONER CRAM:  I hear you, sir, but I'm asking you how well you read it.

LISTNUM 1 \l 16689             MR. DANCY:  That's what I have said.  I misunderstood it.


LISTNUM 1 \l 16690             COMMISSIONER CRAM:  You were sent a document that was warning you, you have a short leash, and you did not take the care to read the terms of the short leash.

LISTNUM 1 \l 16691             Is that not true, sir?

LISTNUM 1 \l 16692             MR. DANCY:  As I said, I was assured by my staff that we were complying.  I believed the staff.  Obviously we made a mistake, I admit to that and I take responsibility for it, and we made staff changes because of that.

LISTNUM 1 \l 16693             COMMISSIONER CRAM:  Now, if I understand it, I calculated roughly you would have 494 news items being reported and so you would have to do, if you are going to be doing 30 percent you say locally, you would have to produce or repeat ‑‑ produce in amongst originals and repetitions, 130 items or so.

LISTNUM 1 \l 16694             MR. DANCY:  Yes, f they have to do ‑‑ if they do 10 stories, they do three; if they only have five stories, they have to do two that are locally relevant, particular to Niagara.

LISTNUM 1 \l 16695             COMMISSIONER CRAM:  And you have one news person who is age 22 to do it?


LISTNUM 1 \l 16696             MR. DANCY:  That's the person who assembles it and puts it together, yes.  I mean, with today's ‑‑ I mean researching it, we used to have to work a lot harder to get news than they do now.  She works on the internet, she can get pretty much ‑‑ the Niagara Police Regional Services now are on the internet, you don't have to phone them any more.

LISTNUM 1 \l 16697             She has certain sites that she uses that are local Niagara sites that are updated regularly.  They give us the information we need.  So because as much as we are fighting with technology we are also using technology to the best of our abilities.

LISTNUM 1 \l 16698             I mean, when CJRN 710 was a news talk station we only had one news person on in the morning as well.

LISTNUM 1 \l 16699             COMMISSIONER CRAM:  Well, I confess to some scepticism as to your ability to sustain full compliance.

LISTNUM 1 \l 16700             Thank you very much.

LISTNUM 1 \l 16701             Madam Chair...?

LISTNUM 1 \l 16702             THE CHAIRPERSON:  Mr. Dancy, before I have my colleagues ask you some further questions, I just want to follow up on the issue of sports.

LISTNUM 1 \l 16703             At recent hearings in Calgary and Regina we heard from CHUM, Rogers and Harvard who were in fact offering the same format as you are with youth contemporary formats targeting the 18 to 24 demographic, and that their local news and information they thought it was very important to focus on high school, college and university sports stories.


LISTNUM 1 \l 16704             MR. DANCY:  These were applications.  Right?

LISTNUM 1 \l 16705             THE CHAIRPERSON:  Yes.

‑‑‑ Pause

LISTNUM 1 \l 16706             THE CHAIRPERSON:  Is that your point?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16707             THE CHAIRPERSON:  No, I do want to ‑‑ all right.

LISTNUM 1 \l 16708             MR. DANCY:  I was just suggesting to you that many people have many really good ideas, but I think if you look at the radio landscape very few have been able to really attract a teen and youth adult.

LISTNUM 1 \l 16709             Corus and Rogers dumped the formats in the largest market in Canada.  Two of the biggest broadcasters there are dumped the formats in the largest market in Canada.  Like I mean ‑‑ I think it's wonderful they are going to attempt to do it.  And they are going to get the licence and they are going to do it for a certain time.


LISTNUM 1 \l 16710             I would like to hear from them a year and a half or two years down the road.  I am five years into it.  I would like to see them at that time down the road whether they are still doing it or not.  I'm not suggesting they won't be, maybe they will.  And they have deeper pockets than I do.  I mean, you are talking some big broadcasters there.  So I applaud them.  You are also talking much bigger markets.

LISTNUM 1 \l 16711             THE CHAIRPERSON:  All right, fair enough.

LISTNUM 1 \l 16712             Vice Chairmen Arpin...?

LISTNUM 1 \l 16713             COMMISSIONER ARPIN:  Your final words are leading me to my question obviously.  How are the market conditions?

LISTNUM 1 \l 16714             That will give me at least some perspective to understand all these issues.  I hear the discussions that you have with the Commission and I understand that we are really going into the nitty‑gritty, but sometimes the financial aspect of a situation colours the reality.

LISTNUM 1 \l 16715             So could you help me understand what is going on in Niagara and particularly with CKEY?


LISTNUM 1 \l 16716             MR. DANCY:  In Niagara, with the exception of Standard Broadcasting which has three signals that encompass not only Niagara but all of Toronto, two FMs and an AM, and use syndicated programming on their number one station which does 65 percent of its billing, its AC station, its Easy Rock station, which uses syndicated programming six hours a day between 6:00 a.m. and midnight, you are talking about a station that does probably 65 percent of their billing and would do easily half the market's billing.

LISTNUM 1 \l 16717             The other players in the market, it is my understanding that there are three of us and that one is not profitable.  We have struggled in the last little while ‑‑ and without my partner Andrew Ferri I think probably we wouldn't be around right now ‑‑ and that we are now turning.

LISTNUM 1 \l 16718             We just got approval in July to increase our sister station, CFLZ‑FM and that will help the company become profitable.

LISTNUM 1 \l 16719             Right now we just have some major advertisers who have shifted their advertising to the youth market.  Again, youth, cell phone delivery companies, cell phone companies have just read on their traditional marketing from 25‑54 to 18‑34, which has been significant, improved our April billing significantly.


LISTNUM 1 \l 16720             I am still of the belief that we can compete in the teen and young adult.  I am still of the belief that if we don't do it right now in 20 years terrestrial radio will be obsolete, because if the youths aren't listening to it, if the youths aren't using it, there is no point in us being here in 20 years.  I am in my mid‑40s, it won't matter to me, but it is going to matter to somebody and I don't want it to die on my watch.

LISTNUM 1 \l 16721             So I really believe that our format can work.  I really believe that the emerging artists, that we can work with the record labels and record companies and we can all do very well in this deal.  The problem that we are having is:  How do you reach them?

LISTNUM 1 \l 16722             I have had to do innovative programming.  It has been very difficult.  And as the CRTC returns we have not been profitable in the last few years, but we are turning the corner and I foresee that we are going to do quite well.  And with our increased signal in the other one, the burden on CKEY will be less and I think between the two of them I think we are going to be able to do all right, but it has been a tough road.

LISTNUM 1 \l 16723             COMMISSIONER ARPIN:  How many employees do you have, specifically for that station?

LISTNUM 1 \l 16724             MR. DANCY:  We have a large number of employees in production and creative, promotions that are across two radio stations.


LISTNUM 1 \l 16725             For that specific radio station, there would be six employees specific to that radio station, and we have 20 employees in all, of which at least seven or eight of them would be for both radio stations.

LISTNUM 1 \l 16726             I am including myself in there, my CFO, sales department, promotions department, production and creative would be for both stations.

LISTNUM 1 \l 16727             COMMISSIONER ARPIN:  And the six that you have specifically for that station, are they on‑air or are they salespeople?

LISTNUM 1 \l 16728             MR. DANCY:  Oh, specific they would be ‑‑ in the radio climate today nobody has one job, with the exception of possibly a salesperson.  That is the only person I know of that can have one job.  So, for example, the guy who does our nights from 6:00 to 10:00, he is also our music director and helps with promotions.

LISTNUM 1 \l 16729             All of our staff are like that.  Our morning news person also does the midday show, voicetracks it.

LISTNUM 1 \l 16730             So everybody has more than one function at the radio station.

LISTNUM 1 \l 16731             COMMISSIONER ARPIN:  Of the CRTC broadcast week, which is 126 hours, how many hours are you local versus how many hours are you voicetracked?

LISTNUM 1 \l 16732             MR. DANCY:  Voicetracked?

LISTNUM 1 \l 16733             COMMISSIONER ARPIN:  Yes.

LISTNUM 1 \l 16734             MR. DANCY:  We are voicetracked ‑‑


LISTNUM 1 \l 16735             COMMISSIONER ARPIN:  I understand that voicetracked is local, but local live versus voicetracked.

LISTNUM 1 \l 16736             MR. DANCY:  We are live in the mornings and afternoon drive every day.  We voicetrack ‑‑ it is not a traditional voicetrack in the fact that we voicetrack in the time slot they are actually on the air, but to do a four‑hour show takes about ‑‑ if you are going to do the 10:00 to 3:00 show, you can do it between 10:00 and 11:00.  So it is very topical and on‑time.  Then the other four hours they do another job for us.  But we are only live in the studio either when we are on location or remote or in the breakfast and the afternoon drive.

LISTNUM 1 \l 16737             COMMISSIONER ARPIN:  All right.  Well, it helps me to understand the current situation of your specific operation.

LISTNUM 1 \l 16738             Thank you very much.

LISTNUM 1 \l 16739             MR. DANCY:  Yes, 6:00 to 10:00 a.m. and 6:00 p.m. to 10:00 p.m. at night are when we are actually live every day.

LISTNUM 1 \l 16740             COMMISSIONER ARPIN:  All right, fine.

LISTNUM 1 \l 16741             Thank you.

LISTNUM 1 \l 16742             THE CHAIRPERSON:  Vice Chairman French...?


LISTNUM 1 \l 16743             COMMISSIONER FRENCH:  Mr. Dancy, you are a Niagara Falls guy.  You grew up there?

LISTNUM 1 \l 16744             MR. DANCY:  No, sir.

LISTNUM 1 \l 16745             COMMISSIONER FRENCH:  Oh, where did you grow up?

LISTNUM 1 \l 16746             MR. DANCY:  I was born in Montreal.  My father was in the broadcast business so I went to Sarnia, Toronto, I mean, you name it.

LISTNUM 1 \l 16747             COMMISSIONER FRENCH:  I'm just feeling badly about your comments about sports, because when I was the age of your current target market I listen to a guy called Rex Stimers ‑‑ do you know who Rex Stimers is?

LISTNUM 1 \l 16748             MR. DANCY:  Yes.  Yes, he is a radio ‑‑

LISTNUM 1 \l 16749             COMMISSIONER FRENCH:  I was absolutely riveted to Rex Stimers.  I heard every game the St. Catharines Teepee's played for at least three or four ‑‑ until puberty really hit and a little time afterwards.  So the story really is that there is not much sports enthusiasm among those kids, or at least they don't get it on the radio.


LISTNUM 1 \l 16750             MR. DANCY:  And they go to the games, they have their friends.  There is no Junior A team any more, okay.  First of all, it's Junior B.  The last Junior A team was actually in Niagara Falls, but there hasn't been a Junior A team in St. Catharine's ‑‑ I hate to date you, sir, but it has been a while.

LISTNUM 1 \l 16751             COMMISSIONER FRENCH:  It's all right.  We have already been told how old we are several times in the last three days.

LISTNUM 1 \l 16752             MR. DANCY:  But the key thing about it is, it is not Calgary or a team with an NHL team or an NBA team or an American league baseball team, or anything like that, so you really ‑‑ when you talk about local sports you really have to talk about the absolute local and hockey is still a big deal.  That is why we do the Junior B.

LISTNUM 1 \l 16753             Seven of the eight teams, Fort Erie, St. Catharines, Niagara Falls, Thorold, I mean you name a Port Colborne, Welland, Stony Creek, I mean they are all in there.  There is only one team of the eight that is not from the Niagara Peninsula.  That is why we picked that particular loop, because it was very local.  We figured that with seven teams, add up the number of players, roughly 20, add their benchwarmers and taxi squad and the rest of it, you probably have 200 players, you had their families and everything else, we figured that would be the largest scale.


LISTNUM 1 \l 16754             Now, do we not ‑‑ yes, we do high school basketball.  A friend of mine's son was the MVP of a local tournament that they just resurrected, the Review Tournament, after 10 or 15 years.  He was the MVP and we reported on that.  We reported on those scores in the high school.  So yes, we do do the high school.

LISTNUM 1 \l 16755             But if you are talking about something that we can commit to every week of the year ‑‑ that is why I asked if it was a weekly, because we have to find things.  The summer is the toughest time of the year for us.  It is very tough in May, June July and August because high school is out, college is and, university is out ‑‑

LISTNUM 1 \l 16756             COMMISSIONER FRENCH:  Is there still a racetrack in Fort Erie?

LISTNUM 1 \l 16757             MR. DANCY:  I'm not sure that the teen and young adults are really into that, but yes there is, sir.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16758             COMMISSIONER FRENCH:  I don't want you to misconceive my objective, because what I am understanding is:

LISTNUM 1 \l 16759             One, you are in a border market which is not a typical radio market;


LISTNUM 1 \l 16760             Two, you are addressing a very challenging demographic, a very challenging market;

LISTNUM 1 \l 16761             Three, by and large you are making what you consider to be a very good faith attempt to observe the Commission's requirements, but that none of them turned out to be a commercial asset in your operations.

LISTNUM 1 \l 16762             You know, if that is fair, fine, if it's not you should say something.

LISTNUM 1 \l 16763             MR. DANCY:  That's fair.

LISTNUM 1 \l 16764             COMMISSIONER FRENCH:  So just in conclusion I would like to say I'm very glad you came.  I know it wasn't much fun.  It has given me a clear impression of who you are and what your operation is about.  I think that you have expressed the problems and challenges clearly and frankly and, for what it's worth, which is 20 percent of this Panel and 10 percent of the CRTC, I found your presentation very convincing.

LISTNUM 1 \l 16765             MR. DANCY:  Thank you.

LISTNUM 1 \l 16766             THE CHAIRPERSON:  Commissioner del Val...?

LISTNUM 1 \l 16767             Legal counsel, please...?

LISTNUM 1 \l 16768             MS DIONNE:  I have some questions.  Some might seem to be repetitive, but I just want to make sure that we cover everything that we want to cover, so please bear with me.


LISTNUM 1 \l 16769             MR. DANCY:  Excuse me.  There was one question and I am forgetting it now, I apologize, but you said legal would discuss it with me when I asked.

LISTNUM 1 \l 16770             MS DIONNE:  Oh, yes.  I could do this right away if you want.

LISTNUM 1 \l 16771             The local programming condition of licence requires that you broadcast one third of your broadcast week to local programming.

LISTNUM 1 \l 16772             So you were correct, it is based on a weekly basis.

LISTNUM 1 \l 16773             MR. DANCY:  All right.  But that is that it is produced.  It doesn't say the content of it, only that it is produced locally, which we have always done.

LISTNUM 1 \l 16774             MS DIONNE:  Yes.

LISTNUM 1 \l 16775             MR. DANCY:  But it doesn't talk about the content.  That was my real question.

LISTNUM 1 \l 16776             MS DIONNE:  You are correct.  There is no specific timeframe for the actual spoken word local.

LISTNUM 1 \l 16777             You understand it correctly.


LISTNUM 1 \l 16778             MR. FORTUNE:  I think it is extremely important, given what we have just discussed, especially regarding local sports, to make this absolutely clear, because it seems to me it is quite possible that there may be a week, and the Commission may conduct an audit of that week and it may discover that there is no specific local sports reported on CKEY‑FM during that week.

LISTNUM 1 \l 16779             It should be clear that if Mr. Dancy can show that when in fact there is relatively interesting local sports that the target audience would be interested in to report on, that if in fact he does report on it when it is happening, like the hockey games, that he is complying with the condition of licence.

LISTNUM 1 \l 16780             MS DIONNE:  Please be comfortable that every time we do a monitoring we ask the licensee to provide a response and they can certainly explain at that point why there weren't sports during that week.  So it is not really a rigid, rigid requirement.

LISTNUM 1 \l 16781             You must provide local sports.  It is not specific on a weekly basis, but when we monitor sometimes we monitor one specific day, sometimes we might monitor one week, sometimes we might monitor three days, but every time you will have the opportunity to file a response on file, on the public record.  All right?


LISTNUM 1 \l 16782             Based on your service contour, does CJRN consider Fort Erie, Niagara Falls, St. Catharines and Welland to be distinct population centres with some of their own distinct area of interest within CKEY's regional market and service area?

LISTNUM 1 \l 16783             MR. DANCY:  Yes.  In one of the interventions I replied there are 11 municipalities which include West Lincoln, Lincoln, St. Catharines, Thorold, Niagara‑on‑the‑Lake, Niagara Falls, Welland, Port Colborne, Fort Erie ‑‑ you are looking at 11 ‑‑ and each one of those are broken into separate areas.

LISTNUM 1 \l 16784             Ford Erie specifically has Thunder Bay, it has the Old town, it has Douglas Town, there are seven or eight areas and that.

LISTNUM 1 \l 16785             So yes, when we are reporting on different areas what might be locally relevant inside one area of the Peninsula might not be in the other area of the Peninsula.

LISTNUM 1 \l 16786             One of the reasons we picked Junior B sports was because there are seven teams in the area so it was really relevant to almost everybody in the Niagara Peninsula.


LISTNUM 1 \l 16787             But in answer to your question, yes, there are areas of the Peninsula, let's say in West Lincoln which has Smithville in it, that there might be something of an area of Smithville that might be, we feel, of particular relevance to part of our service of our market area and so we report on that.

LISTNUM 1 \l 16788             MS DIONNE:  All right.

LISTNUM 1 \l 16789             Do you have any more comments on the Commission's expectation that for regional services you must provide local reflection programming of direct and particular relevance to the major community centres that make up your stations at regional market area?

LISTNUM 1 \l 16790             MR. DANCY:  No, that was ‑‑ one of the Commission staff earlier clarified with me that it was the Niagara Peninsula that was my market.

LISTNUM 1 \l 16791             That was my question, by the way, the wording of the actual call to appear was and they did confirm with me that it was the St. Catharines/Niagara market, the Niagara Peninsula.

LISTNUM 1 \l 16792             MS DIONNE:  All right.  In your letter to the Commission dated November 15, 2005, you have mentioned that you have added a two‑person morning show with emphasis on local information.  We discussed that earlier.

LISTNUM 1 \l 16793             I would like to get more information on this show.  Could you describe the elements of the show that are meant to be of particular relevance to the community you are licensed to serve?

LISTNUM 1 \l 16794             How long is the show or how much of it is spoken word?


LISTNUM 1 \l 16795             MR. DANCY:  It's a morning show where we ‑‑ I mean, we have everything from stupid news to the regular elements of the news programming.  We have Emily Zabo does all of our information for us.  We have a guy by the name of Froggie who does the actual talking about it.

LISTNUM 1 \l 16796             We ensure that snow days there are proper reporting of school openings and closings.  That is very big for our demographic and for the group that we are after.  Is Brock University open or closed?  What are the night classes doing, all of that.  So we are very heavily on information.

LISTNUM 1 \l 16797             At 20 minutes after the hour and 20 minutes to the hour, approximately, as you saw from your audit, that is when we do our news.  We do around three minutes, a little over three minutes of actual hard news.  And that is why the number of stories, because when you were doing three minutes, six minutes an hour and you don't want to repeat stories, it takes a lot of stories to get that done.

LISTNUM 1 \l 16798             Traditionally, in radio a news story might be anywhere from 8 to 10 seconds, a long one would be 20 seconds.  So that takes a lot of stories to fill the time.


LISTNUM 1 \l 16799             And we want to be a bit different.  We want to be something where the youth are involved in it.  So we can't ‑‑ we use the term "scalp news" from another source such as the news talk radio station, because their news talk really isn't that relevant to us.  It isn't relevant to our constituency.  They are in a 50‑plus audience and we want an audience that is 12 to 34.  There is a heck of a difference in what your news content is.

LISTNUM 1 \l 16800             So we have a person that spends the whole time doing nothing but scouring and trying to find news and we record it.

LISTNUM 1 \l 16801             MS DIONNE:  And you have traffic, weather reports?

LISTNUM 1 \l 16802             MR. DANCY:  Yes, absolutely we have traffic.  Yes, we have contracted for traffic.  As a matter of fact, the Commission noted that traffic and weather was well covered.

LISTNUM 1 \l 16803             We do that regularly, we do it in the morning show.  I mean, in one day we looked at it and we counted up the number of weather reports, we did 45, we did 11 traffic reports.

LISTNUM 1 \l 16804             So to us that is very important.

LISTNUM 1 \l 16805             MS DIONNE:  You spoke earlier about the new definition of local programming in the Commercial Radio Policy.


LISTNUM 1 \l 16806             Obviously when you were monitored this definition was not applicable, but on a going‑forward basis, now you understand that you must include local news, weather, sports, promotion of local events and activities.

LISTNUM 1 \l 16807             MR. DANCY:  Yes, we do.

LISTNUM 1 \l 16808             MS DIONNE:  I was just wondering, what measures have you ‑‑ we have discussed about the measure, but I want to make sure that on a going‑forward basis with this new definition what measures have you or will you implement to ensure that you will comply with this new regulatory requirement in your next to licence term?

LISTNUM 1 \l 16809             MR. DANCY:  What we did was, there were a couple of points that specifically ‑‑ I'm just looking for it in my presentation ‑‑ that we specifically addressed.


LISTNUM 1 \l 16810             One was that we have added a community ‑‑ since they changed the rules we have added ‑‑ sorry, not changed, but clarified the wording in the rules, we have added a community calendar broadcast once per hour, okay, which includes events and activities throughout Niagara Peninsula.  That is all it includes, that area, relevant to our audience such as concerts, entertainment events and lifestyle activities.  That is done every day, and that runs once an hour.  So that is the first thing we have done.

LISTNUM 1 \l 16811             The second thing was, we informed all of our on‑air staff that they were required to ensure that at least 30 percent of local content, meaning news, events, activities, refers to communities throughout the Niagara Peninsula, so that they realize they have to do that in all what they do.

LISTNUM 1 \l 16812             MR. FORTUNE:  You added sports.

LISTNUM 1 \l 16813             MR. DANCY:  Yes, I'm sorry.  Yes, sports.

LISTNUM 1 \l 16814             MS DIONNE:  For the local programming elements discussed above, would you be prepared to undertake to take a minimal local news commitment, hours and minutes, as part of your overall news as a condition of licence?

LISTNUM 1 \l 16815             Like right now your COL says three hours of news.  Would you agree as the condition of licence specifying a specific amount for local news?

LISTNUM 1 \l 16816             MR. DANCY:  That's very good.

LISTNUM 1 \l 16817             Could you just give me a minute to talk to my counsel about it?

LISTNUM 1 \l 16818             MS DIONNE:  Yes.

‑‑‑ Pause


LISTNUM 1 \l 16819             MR. DANCY:  If you were going to change it, obviously then I would like to readdress the fact that it was news and spoken word that we spoke with at the last hearing, it wasn't solid news.

LISTNUM 1 \l 16820             If you are going to do a condition which requires a certain amount of that three hours to be local, let's say for argument one hour, then I would like it would say "news and information", "news and spoken word".  That is what we spoke about at the hearing.  We didn't speak about specific hard news.

LISTNUM 1 \l 16821             Yes, I could do that, and yes ‑‑ would it help me reprogram, to not just use it as a not tune out factor but maybe even do some really good stuff that would actually allow me to get teens and young adults to tune in.

LISTNUM 1 \l 16822             But if it is straight news, I really ‑‑ you know, if you are going to change the condition I would love you to change the condition that would actually help all of us attract a youth and young adult listenership.  So if you are going to change it, I would like you to say "three hours of news and information programming spoken word" so that I can add the other elements in and they would be local and I would commit then to a minimal amount, let's a 30 percent or one hour.


LISTNUM 1 \l 16823             MS DIONNE:  I would like to put on the record that that was an "if" question.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 16824             MR. DANCY:  Just a moment, please.

LISTNUM 1 \l 16825             MS DIONNE:  Yes.

‑‑‑ Pause

LISTNUM 1 \l 16826             MR. DANCY:  If you are looking at a content, I think it should be a number of stories not time, or which stories are lead stories.

LISTNUM 1 \l 16827             I think when you start to do time it is going to be very difficult for me to have my staff not just extend a story to make it boring and I will be in a continual circle of not letting them extend stories just make the local story a time story.

LISTNUM 1 \l 16828             It may be relevant that the local story may be the longest story, but I mean if you are looking at it I think it should be either the number of stories or how many times we lead with a local story.

LISTNUM 1 \l 16829             Again, it's and "if" question, but that would be what I would be comfortable with.

LISTNUM 1 \l 16830             MS DIONNE:  All right.

LISTNUM 1 \l 16831             I will ask you two more questions about relating to this mandatory order section of the hearing.


LISTNUM 1 \l 16832             Do you have any concerns about the Commission renewing your licence for another short‑term period to allow it to reassess your compliance in the upcoming years, two years, three years, four years period renewal?

LISTNUM 1 \l 16833             I would like your views on that.

LISTNUM 1 \l 16834             MR. DANCY:  I would like to see the station be allowed to go and ‑‑ I think that the station has demonstrated ‑‑ I mean, the question is, you know:  Have I done something that you can't trust me with?  Every time we have been asked for something or pointed out something I have ‑‑ through my counsel or directly, we have been efficient, we have answered your questions directly, we have never obfuscated, and any time that we felt that there was a mistake we have corrected it immediately and gone back and done it.

LISTNUM 1 \l 16835             I really feel that if we could go on the licence term ‑‑ we suggested one of the things instead of a mandatory order that was done with Smiths Falls and Chilliwack, which Commission records seem to indicate were farther offside than I was.  They had no local references, they didn't say the city of licence they were from, they didn't say their market licence, there were a number of other issues, and they had a form where they sent that Commission on a bi‑monthly that weeks showing what they had done.


LISTNUM 1 \l 16836             That to me would be, I think, a better regulator or a better monitor of what we are doing.

LISTNUM 1 \l 16837             MS DIONNE:  More specifically, do you have ‑‑ I guess that you would like a seven‑year renewal obviously.

LISTNUM 1 \l 16838             MR. DANCY:  No, no.  I'm just asking for the renewal in the term.  I think right now it is about four and a half or five years out or something like that or by the time ‑‑

LISTNUM 1 \l 16839             MS DIONNE:  Yes, all right.

‑‑‑ Pause

LISTNUM 1 \l 16840             MS DIONNE:  Then the last question, which is a typical question for mandatory order hearings, summarize for the Panel why a mandatory order requiring CKEY‑FM to operate in compliance with the condition of licence on local programming should not be issued.


LISTNUM 1 \l 16841             MR. DANCY:  I think first of all CRTC concerns have been fixed immediately whenever they were brought to our attention.  We have never obfuscated on it.  While before now we have proceeded to fulfil requirements, at the last hearing on the basis of what we discussed seven months before our licence renewal we already implemented ‑‑ seven days after the hearing was over.  Within seven days we went and reprogrammed our day‑parts, we hired staff, we had it done within seven days.

LISTNUM 1 \l 16842             As far as process is concerned, every single Tuesday we have a staff meeting and we emphasize the fact of the Commission's concerns that 30 percent would have the talk, three hours of news, we program 10 percent more than that.  The Commission even found I think it was three hours and 18 minutes, which is exactly 198 minutes, exactly 10 percent more, so our programming matched up exactly with what we wanted to do.

LISTNUM 1 \l 16843             So we have shown that every time we have been said do something, it's not like we haven't done what the Commission has asked.  We made some mistakes and I admitted that.

LISTNUM 1 \l 16844             Staff employment, including mine, is on compliance and we suggested a mechanism that I think is a better monitor.

LISTNUM 1 \l 16845             So no, I don't believe that a mandatory order is necessary.

LISTNUM 1 \l 16846             MS DIONNE:  Now I have two final questions with regard to the new Canadian Content Development Contribution under the new policy that was issued in December.


LISTNUM 1 \l 16847             So we are done with the mandatory order stuff.

LISTNUM 1 \l 16848             Please confirm your understanding that under the new Canadian Contribution Development policy your station will have to contribute a basic annual CCD contribution imposed as a regulation based on the station's total annual revenues and in the amounts set out in paragraph 116 of the new Radio Policy.

‑‑‑ Pause

LISTNUM 1 \l 16849             MR. DANCY:  In our letter of January 2007 we confirmed that ‑‑ it says:

"This letter will confirm that CKEY does wish to amend our plans to match the Commission's new policy for CD as set out in Broadcasting Public Notice..."  (As read)

LISTNUM 1 \l 16850             I realize that it's a regulatory thing and all that, but I have to say that the group, the Shaw Festival that has always got our funding up until the end of this broadcast year ‑‑ because I believe this new CCD is not effective until September 1st ‑‑ that this will be the last year that we will be able to do it with the Shaw.


LISTNUM 1 \l 16851             I have to tell you that their disappointment is great.  They were quite upset by that.  But they don't qualify any more, which is not a great thing.  If you have into the Shaw Festival in Niagara‑on‑the‑Lake, it is a great ‑‑ it is absolutely phenomenal, and if you haven't, you should go.

LISTNUM 1 \l 16852             MS DIONNE:  Well, I wanted to make sure that you understand the new policy requirement, but the contribution that will be imposed by way of regulation is a basic contribution.  I mean, there is nothing preventing you from giving money to this organization.

LISTNUM 1 \l 16853             My last question is just to get your comment on an implementation mechanism.

LISTNUM 1 \l 16854             As set out in the Commercial Policy, the new annual basic contribution will be imposed on all commercial radio licences by regulation.

LISTNUM 1 \l 16855             The Commission could impose a transitional condition of licence reflecting the new basic annual CCD until such time as the regulation comes into force.


LISTNUM 1 \l 16856             We did mention we expect the regulation to come into force on the first of September, but we never know what can happen.  We have to go through an LSP at the Justice Department and sometimes it can be a long process, but we do hope that it will be in place for September 1st.

LISTNUM 1 \l 16857             So I would just have your comments on whether you would mind the Commission imposing a transitionary condition of licence that would in fact reflect exactly what would be in the regulation and it would expire once the regulation is put into place.  It is a standard condition of licence.

‑‑‑ Pause

LISTNUM 1 \l 16858             MR. DANCY:  Yes.

LISTNUM 1 \l 16859             MS DIONNE:  Thank you, Madam Chair.

LISTNUM 1 \l 16860             THE CHAIRPERSON:  Mr. Dancy and Mr. Fortune, that concludes our questioning of you this afternoon.  I'm sure I speak on behalf of the whole Commission when I say thank you for the clarity and frankness with which you presented your views to us today.

LISTNUM 1 \l 16861             Thank you.

LISTNUM 1 \l 16862             Madam Secretary...?

LISTNUM 1 \l 16863             THE SECRETARY:  As there are no intervenors who will appear with respect to this application, we will now proceed to Phase III where the applicant may respond to the intervention that was filed on these matters.

‑‑‑ Pause


LISTNUM 1 \l 16864             MR. DANCY:  We replied in writing to one intervention, but I would like to say that my partner did ‑‑ and I forgot to mention it, he did send a letter that I would like to put on record for the Commission, just recommitting what he said in 2004.

LISTNUM 1 \l 16865             At that point he was not part of the licensee, but he wanted to be.  Since then we have had a change of control and Mr. Ferri is my partner and he is the controlling shareholder through his company Northguard Capital, and he just wanted to put a letter on file stating his commitment to working with the CRTC.

LISTNUM 1 \l 16866             He is a long‑time Niagara resident, he has lived his whole life in Niagara and all his businesses are in Niagara and I just wanted to put that letter on file, if that would be okay.

LISTNUM 1 \l 16867             MS DIONNE:  The letter will be attached to your presentation on the public file.

LISTNUM 1 \l 16868             MR. DANCY:  Thank you.

LISTNUM 1 \l 16869             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 16870             THE SECRETARY:  This completes the consideration of Item 20 on the Agenda of this public hearing.


LISTNUM 1 \l 16871             I would like to indicate for the record that the intervenors who did not appear and were listed in the Agenda as appearing intervenors will remain on the public file as not appearing interventions.

LISTNUM 1 \l 16872             Also, there are a number of non‑appearing applications on the Agenda of this public hearing.  Interventions were received on some of those applications.  The Panel will consider these interventions, along with the applications and decisions will be rendered at a later date.

LISTNUM 1 \l 16873             This completes the Agenda of this public hearing.

LISTNUM 1 \l 16874             Thank you, Madam Chair.

LISTNUM 1 \l 16875             THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 16876             Before I officially adjourned the hearing, I would just like to thank all applicants, all intervenors, Commission staff for their incredibly hard work as they perform their duties, the stenographer, the translators and, last but not least, my colleagues for making my first experience of chairing a hearing quite enjoyable.

LISTNUM 1 \l 16877             This hearing is adjourned.

‑‑‑ Whereupon the hearing concluded at 1719 /

    L'audience se termine à 1719

 

 

 


  

 

 

 

                 REPORTERS

 

 

 

 

_____________________     _____________________

Johanne Morin             Jean Desaulniers

 

 

 

 

_____________________

Monique Mahoney

 

 

 

 

 

 

 

  

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